March Auto Statistics: MY Automotive (NEUTRAL) - Disappointing 1Q16 TIV

Auto Stats: Automotive (NEUTRAL) - Disappointing 1Q16 TIV

• Subpar recovery in Mar TIV; Cut 2016 TIV forecast. Despite a 29% MoM rebound, Mar 2016 TIV of 48.8k units (-28% YoY) was still subpar (below 55k units p.m.), having considered an unusually strong Mar 2015 TIV driven by pre-GST sales. We cut our 2016 TIV forecast to 620k units (-7% YoY) from 645k units (-3% YoY) to account for the weaker- than-expected 1Q16 TIV (-22% YoY), weighed down by poor consumer sentiment and higher car prices.
• Strong TIP, a leading indicator for pick-up in Apr TIV. MoM TIP rebound was led by Perodua, while Proton continues to slide, indicating further weakness in sales. We expect Perodua to further consolidate its market share, in the national marque segment, with the launch of the Perodua sedan in 3Q16.
• Poor consumer sentiment but… Positively, the premium car segment (i.e. Mercedes Benz, BMW and VW) remained unfazed by weak consumer sentiment, recording YoY growth in 1Q16. Elsewhere, Cycle & Carriage Bintang (CNCB MK; Not-rated) reported a 43% YoY jump in 1Q16 earnings from stronger Mercedes Benz sales.
• Stock picks. We are excited about Perodua’s entry into the sedan car market in 2H16 which could boost 2H16 sales while at the same time consolidate Perodua’s position within the national car segment. For this, we like recently listed Pecca, the sole supplier of leather upholstery to Perodua. Meanwhile, BAuto remains our only other BUY in the sector for its exclusive Mazda distributorship in Malaysia and the Philippines.