HLIB Research sees downside risk to TIV forecast of 605,000 units due to weak sentiment

PETALING JAYA: HLIB Research sees downside risk towards its total industry volume (TIV) expectation of 605,000 units for the automotive industry for 2020 due to the weakening market sentiment.

This is on the back of the Covid-19 outbreak, ongoing domestic political uncertainty as well as weakening ringgit/US dollar outlook.

TIV was down 22% month on month (mom) and 12% year on year (yoy) to 42,700 units for January 2020.

HLIB Research maintains its overweight call on the sector on a selective stock approach, with top picks being DRB-Hicom Bhd and MBM Resources Bhd.

The Malaysian Automotive Association (MAA) has revised the TIV forecast for the year to 607,000 from 612,000 units after having factored in economic and environmental considerations.

Meanwhile, AmResearch said it continues to be optimistic on national car marques, Proton and Perodua for 2020, but it remains cautious on the foreign and premium car brands as consumers are more careful and conservative with their discretionary spending, indirectly benefiting cheaper and better value-for-money cars.

It highlighted that the approval rate for loans on passenger cars stood at 53.8% in December, a decrease of 3.3% from November and lower than the average rate of 59.6% in 2018.

With that, it maintains a neutral stance on the automotive sector with a TIV projection of 610,000 units for the year.

“Our top picks for the sector are DRB-Hicom and MBM Resources as we expect Perodua and Proton to continue their strong showing in 2020, commanding pole position and runner up respectively in terms of TIV market share,” said AmResearch.

Proton has introduced a sales volume target of 132,000 units for 2020 and it recorded a delivery of 8,500 units in January, which includes 1,400 units of X70.

For the month, Saga continues to be its mainstay with a total of 3,900 units (+72% yoy) and the Persona almost doubled in sales with 2,100 units.

Perodua reported a total sale volume of 17,500 units, a 5% and 13% decline mom and yoy, respectively. For the year, the car maker has a sales volume target of 240,000 units.

source https://www.thesundaily.my/business/hlib-research-sees-downside-risk-to-tiv-forecast-of-605000-units-due-to-weak-sentiment-MA2075178