Jan 2016 Auto Statistics, Results: Tan Chong Motor 4Q15 (Below), Globetronics 4Q15 (Within), Inari Amertron 2Q16 (Below), UMW O&G 4Q15 (Below)

We have (i) Jan 2016’s car sales/production statistics and results note on (ii) TCM 4Q15, (iii) Globetronics 4Q15, (iv) Inari Amertron 2Q16 and (v) UMW O&G 4Q15.

Auto Stats: Automotive (NEUTRAL) - Less new cars for CNY?

• Jan 2016 TIV at almost 4-year low, having plummeted 36% MoM and 12% YoY to 44.6k units as consumers had frontloaded purchases prior to price hikes beginning Jan 2016. Our 2016 TIV forecast of 645k units (-3% YoY) is unchanged. For now, sector valuations are just about fair (14.7x CY16 PER).
• Red across the board. The MoM contraction in Jan 2016 TIV was seen across the board, except for Mercedes Benz (+26% MoM, +139% YoY), led by Toyota (-77% MoM, -26% YoY) whose sales fell to a 12-year low.
• Stock picks. BAuto is our only BUY in the sector for its exclusive Mazda distributorship in Malaysia and the Philippines which are gaining traction. We see further earnings downside to UMWH (SELL) from its (i) auto (weak sales coupled with negative USD exposure) and (ii) O&G divisions. 4Q15 results are due out on 25th Jan 2016.

Tan Chong Motor (TCM MK; HOLD; TP: MYR2.60) - Below expectations

• Entering the tunnel. TCM’s 4Q15 core results came in the red for the first time, marred by higher imported component costs (~27%-30% of COGS) due to a weaker MYR. We cut our FY16/17 forecasts by 54%/25% to account for softer sales and higher costs. As a result, our TP is marginally lowered to MYR2.60 (-2%) based on an unchanged 0.6x FY16 NTA peg, which reflects the challenging outlook ahead. Valuations are fair at 0.6x P/BV; maintain HOLD.

Globetronics Technology (GTB MK; BUY; TP: MYR7.35) – Record profit; no surprises

• An opportunity to add. Globetronics achieved yet another record earnings in 2015 as growth in the sensor division outweighs weakness in the rest; within expectations. Our forecasts are unchanged; 2016 will be a year of two halves with a weak 1H to be offset by a strong 2H after the launch of the 3D-imaging sensor. Recent share price weakness is an opportunity to add. Maintain BUY with an unchanged TP of MYR7.35 on 17x CY17 PER target.

Inari Amertron (INRI MK; BUY; TP: MYR4.15) - Marginally below expectations

• Earnings outlook remains intact. Blip in RF division in 2Q-3QFY6/16 is temporary as smartphone players rationalise their existing stockpile in preparation for new launches. Whilst there are some downside risk to earnings from this, we keep our forecasts unchanged pending an analyst briefing today. Inari’s outlook remains intact with potential new job win following its latest plant acquisition. Maintain BUY; MYR4.15 TP (17x CY17 PER) is unchanged.

UMW Oil & Gas (UMWOG MK; BUY; TP: MYR1.16) - Kitchen sinking 4Q15

• Bad results and tough outlook but all priced in. While the kitchen sinking exercise was expected in 4Q15, the core loss was higher than earlier anticipated. The outlook for rigs is tough and UMWOG is expected to remain in the red but this bearish sentiment has been priced in, in our view. Our earnings forecasts are unchanged. We reiterate our non-consensus trading BUY call with a lower TP of MYR1.16 (-7%) as we roll forward our valuations to 2016 on unchanged 1x EV/replacement value peg.