Post-tax holiday on passenger cars, Perodua managed to garner around 24,265 new bookings in the month of July (equivalent to around a month of Perodua TIV) despite the expiry of the sales tax exemption on 30th June 2022. MIDF gathers that this is on top of the 243K outstanding bookings (which is equivalent to a year’s worth of Perodua TIV)
announced last month.
The strong July bookings signal still strong sales momentum, which MIDF thinks is partly driven by the recent launch of the new Alza and broadly, pent-up demand amid a gradually improving labor market in line with the macro recovery. The new Alza which was launched on 20th July has seen 39K bookings (around 9K bookings collected in July itself), significantly higher than its monthly sales target of 3K with a waiting period of 8-10 months.
Semiconductor supply secured for rest of 2022. Positively, Perodua’s CEO also indicated that the group has secured chip supplies for the remainder of the year to achieve its record annual TIV target of 247,800 units (+30%yoy) for 2022. The number one car maker is also looking at sharing resources with its vendors e.g. workforce placement, warehouse sharing and parts arrangements to address foreign labor shortage issues at the vendors and ensure a smooth supply chain domestically. MIDF anticipates these efforts to result in a certain extent of cost savings which would help cushion the impact of higher material and logistic costs.
Potentially higher 2022 sales target? While Perodua’s July TIV is expected to be slightly weaker than June given residual chip supply issues, Perodua is understood to be attempting to increase production to around 26K/month in 2H22 (vs. an average 21.7K/month in 1H22) in order to shorten its waiting list. Should this materialise, MIDF sees possibilities of 2022 TIV outperforming even management’s bullish 247.8k sales target.
As it stands, 2022F Perodua TIV is 243.5K (+28%yoy), slightly more conservative than management’s target – Perodua’s JanJul22 cumulative sales of 146K account for 60% of the projection.
Key beneficiaries. MBMR (BUY, TP: RM4.28) and UMW (BUY, TP: RM4.78) are key listed plays into Perodua given
their respective 22.6% and 38% stake in Perodua. The former provides cheaper entry at 6x FY23F PER (vs. historical mean
of 8x) and is more leveraged to Perodua’s earnings (estimated at 69% of overall group earnings). MBM is also a multipronged play into Perodua via its part manufacturing division which supplies components to Perodua and its retailing division which is the largest Perodua dealer group accounting for ~10% of overall Perodua sales historically. Having said that, UMW is now trading at a deep 40% discount to the historical mean and is a better proxy to the overall sector recovery given its exposure to both Perodua and Toyota which account for 52% of TIV
