Automobile Sector : Post Hari Raya drop, Mazda surprises NEUTRAL

SECTOR FOCUS OF THE DAY

Automobile Sector :  Post Hari Raya drop, Mazda surprises           NEUTRAL

July TIV saw big post-Hari Raya drop. TIV fell 26% MoM with the biggest declines in Mazda (-47%) and Proton (-45%). The MoM drop in TIV is not unusual and sales have historically fallen between 9% and 25% in the month after Hari Raya for the previous four years. Recall that companies had ramped up sales and marketing campaigns for the Hari Raya period, especially in lieu of the lack of new models to create excitement.  On a YoY basis, the drop of 28% was similar to the drop seen for March. The major surprise in July was the big MoM drop in Mazda. Mazda sales for the month nearly halved, to the lowest monthly sales seen since Feb 2014. This stemmed from lower sales of passenger cars and SUVs, which fell by 46% and 49% respectively. Nonetheless, Mazda is still outperforming the industry: on a YTD basis it grew 1.5% YoY, the only one to see growth. The post-Hari Raya drop was also exceptional for Proton. Proton sales in July fell 45% MoM to its lowest monthly sales seen in at least 4 years. Proton and Toyota are still the two worst performers YTD. Jan-July sale for Proton were 35% lower YoY and Toyota's were lower 30% YoY, against a drop of 17% for the industry. Mazda remains the exception from its peers, growing 1.5% YoY during the period.

In terms of market share: Perodua, Honda, Nissan and Mazda have seen gains at the expense of Proton and Toyota. Perodua's seen its market share grow to 35% in the Jan-July period from 32% in FY15. In the non-national segment Honda leads with 28.6% followed by Toyota (19.5%) and Nissan (14.6%). Compared to last year, Proton has lost  2.9ppts and Toyota 7.2ppts in their market share. The industry looks to be on track to reach the projection of a 13% contraction to 580K units this year. YTD TIV is still 17% lower but this has improved from -22% in the first quarter. The MAA has revised its forward projections for the next four years: 630K units for 2017 (+8.6% YoY), 686.2K units for 2018 (+8.9% YoY), 702K units for 2019 (+2.3% YoY) and 717.4K units in 2010 (2.2% YoY).

Others :

Tan Chong Motor : Losses continue into 2Q         HOLD

QUICK TAKE

Plantation Sector : Newsflow for week of 15 to 19 August             NEUTRAL

NEWS HIGHLIGHTS

Malaysia Building Society : ‘Islamic banking strategy will spur growth’

Technology Sector : Vivocom to win RM600mil deal?

Consumer Sector : Amway braces for more challenges