Impact on sector likely to be mild. We expect automakers in Malaysia - which rely heavily on completely-knocked-down (CKD) imports from Thailand (notably for UMW and DRB-Hicom) - to be impacted by the supply chain disruptions although we see the impact largely as being mild. Our channel checks indicate that the inventory of local auto players is at comfortable levels of at least a month. Assuming a one-month backlog, in a worst-case scenario, this would only affect total TIV volume of the Japanese marques for a month, at an estimated total of 15,000 vehicles. This will subsequently be made up for in the subsequent months, provided that the rainy season does not prolong.
Maintain NEUTRAL. We maintain NEUTRAL on the auto sector as sentiment on big ticket purchases in the upcoming months will remain weak. Adding to the current woes is the strengthening USD vs MYR, which will put a dent on earnings. UMW, PROTON and TCHONG remain Sells, with FVs of RM6.29, RM2.00 and RM4.27 respectively, with our Buys confined to autoparts makers such as EPMB and Delloyd Ventures, whose FVs are RM1.38 and RM3.88 respectively.
Maintain NEUTRAL. We maintain NEUTRAL on the auto sector as sentiment on big ticket purchases in the upcoming months will remain weak. Adding to the current woes is the strengthening USD vs MYR, which will put a dent on earnings. UMW, PROTON and TCHONG remain Sells, with FVs of RM6.29, RM2.00 and RM4.27 respectively, with our Buys confined to autoparts makers such as EPMB and Delloyd Ventures, whose FVs are RM1.38 and RM3.88 respectively.
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