Kenanga Research maintains its total industry volume projection of 740,000 units (minus 8% year-on-year) for 2024.
PETALING JAYA: The automotive industry’s earnings visibility remains good as it is backed by a booking backlog of 200,000 units as at end-May 2024.
More than half of the backlog is made up of new models, alluding to the appeal of new models to car buyers.
This trend is likely to persist throughout the year, given a strong line-up of new launches, said Kenanga Research.
It maintains its total industry volume (TIV) projection of 740,000 units (minus 8% year-on-year) in 2024.
This is in-line with the forecast of the Malaysian Automotive Association and the research house has a “neutral” stand on the sector.
It will also be business as usual for the affordable segment as its target customers, namely the B40 group, will be spared the impact of the impending fuel subsidy rationalisation and also could potentially benefit from the introduction of the progressive wage model.
But the same cannot be said for the mid-market segment as its target customers, namely the M40 group may hold back from buying a new car, or they may down trade to a smaller car or switch to an electric vehicle (EV) to cut their fuel bills, upon the introduction of fuel subsidy rationalisation.
Its top pick is MBM Resources Bhd
for its strong earnings visibility, backed by an order backlog of Perodua vehicles of more than 100,000 units (almost half of its 2024 target sales of 340,000 units).
It is also a good proxy to the mass-market Perodua brand, given that it is the largest dealer of Perodua vehicles in Malaysia, as well as its 23% stake in Perusahaan Otomobil Kedua Sdn Bhd, the producer of Perodua vehicles, and its attractive dividend yield of about 7%.
Vehicle sales will also be supported by new battery electric vehicles (BEVs) that enjoy sales and service tax exemption and other EV facilities incentives up until 2025, for completely built-up vehicles and 2027 for completely knock-down units.
The new registration for BEVs leapt from 274 units in 2021 to over 3,400 units in 2022, 10,159 units in 2023 and 6,234 units for year-to-date April 2024.
The research house expects more favourable incentives from the government that has set a national target for EVs and hybrid vehicles of 15% of TIV by 2030 and 38% by 2040.
It said the government will speed up the approval for charging stations. The number of charging stations in operation currently of 3,951 should almost triple to 10,000 by end-2025.
