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Auto sector on track for record-breaking TIV in 2022, says CGS-CIMB

Auto sector on track for record-breaking TIV in 2022, says CGS-CIMB

03 Nov 2022

CGS-CIMB Securities has maintained its “neutral” rating on the Malaysian automotive sector and said total industry volume (TIV) in September 2022 was flat month-on-month (m-o-m), while 3Q22 TIV grew 8% quarter-on-quarter (q-o-q), mainly driven by a recovery in production volume at Proton Holdings Bhd.

In a note on Wednesday (Nov 2), the research house said 9M22 TIV jumped 62% year-on-year (y-o-y).

CGS-CIMB raised its 2022 TIV by 5% to 667,000 in view of robust backlog orders and new launches, adding that the revised TIV is ahead of MAA’s 630,000 forecast by 6%.

“We expect the sector to register positive y-o-y and q-o-q revenue growth in 3Q22, driven by higher TIV delivery, but sector’s earnings performance could be offset by higher opex given the unfavourable forex movement and inflationary cost pressures from rising raw materials and labour costs.

“The average ringgit/US dollar rate fell by 3.0% q-o-q and 6.8% y-o-y in 3Q22.

“We stay ‘neutral’ on Malaysian autos. Bermaz Auto Bhd is our top pick due to its attractive 4.9-5.5% CY22-23 yields and growing market share with the addition of Kia and Peugeot marques,” it said.

Source: The Edge Markets