Automotive (NEUTRAL) - Sustained weakness in Sep TIV
- Weak Sep TIV; trim 2015 TIV estimate by 0.8% to 655k units. Sep 2015 TIV continued to weaken for the second month by 4% MoM to 51k units, bringing 9M15 TIV to 485k (-1% YoY), meeting 74% of our revised 2015 TIV estimate of 655k (-2% YoY).
- Car price hike news in the limelight. Over the past month, car price hikes have been in the limelight with Toyota and Honda confirming hikes from 3%-16% begining Jan 2016, citing higher costs due to a weaker MYR. Proton and Mazda will keep their prices for now while Nissan mulls over a likely hike.
We expect a short-term uplift in
demand over the next 3 months, on the back of the upcoming price hikes in Jan
2016 and year-end sales campaign. Thereafter, we expect 1Q16 to see an overhang
in terms of sales. Auto players who are maintaining a competitive pricing
strategy could see potential market share gains in 2016.
- No change in our views & picks. MBM and BAuto remain our BUY picks for exposures to the auto sector from a valuations perspective. The former has market share leadership in the A segment via its 22.6% stake in Perodua. The latter is gaining traction with the Mazda franchise in Malaysia as well as the Philippines. Its new, attractive launches coupled with competitive pricing will drive growth.
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