Bright Future For Malaysia's Auto Sector

Malaysia's automotive industry remains optimistic, with the sector forecast to post excellent total industry volume (TIV) figures for 2022-2023, underpinned by healthy deliveries and new reservations.

Despite the lack of a tax waiver, demand for cars in Malaysia remains high as automakers continue to introduce new models to entice consumers.

Kenanga Research, which maintained its "overweight" rating for the sector, increased its TIV forecast for 2022 to 680,000 units from 650,000 units before. Its updated TIV prediction for 2023 was 690,000 units, up from 660,000 units previously.

Hong Leong Investment Bank (HLIB) Research, on the other hand, increased its TIV target for 2022 to 700,000 units, a record high for the industry, before lowering it in 2023.

The Malaysian Automotive Association (MAA) forecasted TIV of 630,000 units in 2022 and 636,000 units in 2023.

TIV for October 2022 was 61,002 units, a 10% month-on-month (m-o-m) decrease from 67,698 units sold in September 2022 and a 6% year-on-year (y-o-y) decrease from 64,762 units sold in October 2021, according to MAA data.

TIV increased by around 6% year on year in the first ten months of 2022, reaching 577,902 units.

According to Kenanga Research, the October 2022 TIV came in at 89% of its full-year prediction, as the delivery of selected models, especially Perodua and Toyota, picked up momentum due to the easing of component shortages.

MBM Resources Bhd is Kenanga Research's sector top selection, owing to the company's market leader position in national marques, and Bermaz Auto Bhd (BAuto) for its presence in the premium mid-market segment. It set MBM Resources' target price at RM4.45 and BAuto's at RM2.30.

Meanwhile, HLIB Research's top sector recommendations included MBM Resources, BAuto, and DRB-Hicom Bhd.