Analysts have raised their projection for industry-wide sales volume, that is, Total Industry Volume (TIV), by 8% to 800k units for 2024. The projection looks set to surpass the annual forecast of 765k by Malaysia Automotive Association (MAA).
This is backed by strong sustained demand in the affordable segment, attractive new launches, softer-than-expected impact from e-invoicing, and a downtrading trend by mid-market buyers.
Kenanga Research has upgraded the automotive sector to OVERWEIGHT (from NEUTRAL).
While the core thesis hasn’t changed, sales volumes are likely to continually surprise, and value has emerged in selected names.
Bermaz Auto Berhad (BAUTO) and DRB-HICOM Berhad (DRBHCOM) are upgraded to OUTPERFORM due to their share price action.
While reiterating the OUTPERFORM rating, analysts have raised their target price for Hong Leong Industries Berhad (HLIND) by 7% to RM14.50, and MBM Resources Berhad (MBMR) by 3% to RM6.50.
MBMR is the top pick of the sector, being a good proxy to the affordable and fuel-efficient Perodua brand beside offering an attractive dividend yield of about 7%.
As at 10:17am on Wednesday, the stock for Hong Leong Industries traded at RM13.70, and MBM Resources RM5.91. (Stock updates from www.klsescreener.com)
