PETALING JAYA: A number of automotive stocks remain on the radar and are compelling buys, despite the recent release of the November total industry volume (TIV) by the Malaysian Automotive Association showing a decline in sales for the month.
TA Research has maintained an “overweight” recommendation for the automotive sector and also maintained its TIV forecast of 700,000 units for 2025, noting that this would be a 13% contraction year-on-year (y-o-y) from 2024.
“The national-vehicle segment experienced a slower performance in Nov 2024, with both Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and Proton Holdings Bhd (Proton) posting declines in monthly and yearly sales comparisons,” the research house said, adding that Perodua remained the dominant player with a market share that grew by 2.5 percentage points to 48.6% in November.
The research house noted in a report that total national-vehicle sales, despite the weaker November data, remained strong year-to-date with 5% growth y-o-y to 460,000 units driven primarily by Perodua’s robust 9% y-o-y increase to 325,900 units offsetting Proton’s 3.4% y-o-y decline to 134,100 units.
There were mixed performances across the non-national brands for November, with Honda showing a 12.7% month-on-month increase but a 15.4% decrease y-o-y. Nissan, Toyota, Mazda, and Volkswagen all experienced significant y-o-y declines, with Nissan dropping by 35.2%.
“Year-to-date non-national sales remained virtually unchanged compared with last year, with a modest increase of 0.2%. Notable growth came from Honda, which saw an uptick of 4.1%, while several key brands experienced significant y-o-y declines, including Volkswagen (minus 35.7%), Mazda (minus 23.2%), Nissan (minus 21.2%), and Toyota (minus 7.2%),” it said.
The research house upgraded Bermaz Auto Bhd
to a “buy” rating from “hold” with a target price of RM2.05 because of the company’s substantial upside potential despite the subdued earnings outlook ever since the release of weaker-than-expected results for its second quarter ended Oct 31, 2024.
The research house said the stock remained appealing after falling by around 23%, underpinned by a solid net cash position of RM184.2mil or about 15.8 sen per share and an attractive dividend yield of 10%.
It also maintained a “buy” rating on Sime Darby Bhd with a target price of RM2.74 and a “sell” rating on MBM Resources Bhd with a target price of RM6.40.
