Automotive (OVERWEIGHT) - Malaysia Feb 2012 TIV - REBOUNDED

Automotive (OVERWEIGHT)

Malaysia Feb 2012 TIV - REBOUNDED

Despite effect from Thailand flood and tightening of bank lending rules, MAA’s Feb 2012 data indicated TIV recovering growth of +9.0% yoy and +7.5% mom indicating returning of consumer interests. Nevertheless year-to-date Malaysia TIV still suffer -10.8% yoy. We maintained our +6% TIV growth in 2012 due to : 1) continued consumerism; 2) improved household income; and 3) supply normalization.

The dominant national cars reported lower combined market share of 59.0% in Feb vs 61.4% in Jan 2012. Perodua (UMW and MBMR) had a strong rebound in Feb with +22.0% yoy and +10.3% mom, thanks to Viva and Alza. On the other hand, Proton reported sales drop in Feb with -6.1% yoy and -5.1% mom.

Toyota (UMW) reported significant jump in Feb sales with 34.2% yoy and 47.9% mom, on the back of strong delivery of Hilux, Vios and Avanza. Nissan (TCM) reported relatively sustained sales in Feb with -2.3% yoy and +3.6% mom. Honda (DRB) was only able to deliver CBU units in Feb due to shutdown of Melaka assembly plant and hence the growth of -84.6% yoy and -28.5% yoy.

Hybrid cars sales increased 6.0% mom to 443 units with new market entrance of Honda CRZ (RM115k) and Toyota Prius C (RM97k). Honda recently launched Jazz Hybrid at RM95k (cheapest in the market). We expect continued strong demand for hybrid cars in 2012, due to lowered price (tax free) as well as its fuel economy advantage.

We remain OVERWEIGHT on the sector. Top picks of the sector are DRB (TP of RM3.50), TCM (TP: RM5.10) and UMW (TP: RM8.25).

Source: HLIB Research 22 March 2012 

TCM (BUY) - Indochina the Next Growth Phase

TCM (BUY)

Indochina the Next Growth Phase

• In line – Reported 4Q11 core net profit of RM30.7m, leading to FY11 core profit of RM221.7m, in line with our forecast of RM226m, but below consensus’s RM250.7m.
• FY11 sales performance was affected by the global supply chain disruption due to Japan tsunami (Mar 2011) and Thailand flood (Oct 2011), as well as the weakening of RM against US$.
• Management expects supply chain to return to normal by end 1Q12, and anticipate stronger 2H2012.
• Vietnam operation reported EBITDA loss of RM5.8m due to high operational start-up cost. We expect the foreign unit to gain momentum in FY12 with the commencement of Danang manufacturing plant.
• Announced final gross dividend of 6 sen less 25% tax (net dividend 4.5 sen). The total net dividend for FY11 will be 9 sen (2.1% net dividend yield).
• Maintain BUY with unchanged Target Price of RM5.10.

Source: HLIB Research 27 Feb 2012