Automotive sector to remain positive in 2022 says analysts
23 Feb 2022
The Malaysian automotive sector is expected to remain positive in 2022 with total industry volume (TIV) growth to increase 12-14 per cent year-on-year (y-o-y), as the flood-induced supply disruption in January 2022 is temporary, said MIDF Research.
According to the Malaysian Automotive Association (MAA), TIV for January 2022 declined by 38 per cent month-on-month (m-o-m) to 40,581 units.
In a note, MIDF Research forecast the TIV to be around 570,000 – 580,000 units this year, a more conservative stance compared to the MAA’s projection of 18 per cent growth y-o-y or 600,000 units.
“It is at the lower end of the pre-pandemic annual TIV range as we remain wary of the global chip supply shortage and potential supply chain constraints.
“Nevertheless, any stronger-than-expected TIV serves to underpin our positive call on the sector,” it said.
The research house reiterated its positive call on the auto sector as a play into the recovery in domestic consumption, underpinned by strong outstanding bookings, support from the tax holiday extension, record low-interest rates and gradually improving employment and household income situation.
It had named Bermaz Auto Bhd (BAuto) as its top pick due to its brand expansion following the acquisition of Kia and Peugeot franchise, leading to structural expansion in market share and above-industry growth.
MBM Resources Bhd and UMW Holdings were also included as its top picks as both companies are key proxies to the sector’s recovery, given their exposure to Perodua and Toyota (UMW) – effectively controlling the largest share of the industry.
“Key risks to our call are further lockdowns, a prolonged spike in inflation, a more aggressive than expected normalisation of interest rates and a weaker ringgit,” it said.
Meanwhile, Kenanga Investment Bank Bhd has maintained its ‘neutral’ call on the automotive sector, with 2022 TIV target of 600,000 units or 18 per cent growth, in line with MAA’s 2022 TIV target.
It said sales for February 2022 are expected to be the same as January 2022 due to the shorter number of working days and supply chain disruption owing to the recent floods and ongoing chip shortages.
“Sales and Service Tax-exemption is still ongoing until June 2022, with slew of new launches ahead, including models launches that was postponed from 2021,” it said.