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BIMB SECURITIES RESEARCH

MARKET INSIGHT


Go to https://www.bisonline.com.my/
Wednesday, 30 July, 2014

Sector Update
PP16795/03/2013(031743)





www.bimbsec.com.my
| 1



Neutral
Automotive


TIV for June 2014







Research Team
research@bimbsec.com.my
03-26918887 ext 175




TIV. Total industry volume (TIV) for June improved by 4.7% or 58,561 units compared
to the previous month. YoY TIV increased by 9.2%. The better MoM TIV growth is
driven by both the passenger and commercial segments which increased by 4.1% and
9.7% respectively. Total vehicle sales grew 6.3% to 333,142 units in the 1HFY14 as
opposed to 313,488 units in the previous corresponding period. The growth was within
ours and MAAs full year expectations of 653,200 units and 680,000 units respectively.
The strong sales were not surprising as there were aggressive promotion campaigns
and discounts given to customers by industry players amid pre-Hari Raya festive
season. The introduction of new car models and refresh version of existing models also
contributed to the improved sales volume. However, uncertainties in consumer
spending as a result of the forthcoming GST implementation may stifle the long term
prospect in this industry.

Improved Perodua sales. The national segment increased by 2.3% MoM to 26,874
units in June, partly due to the improved sales from Perodua which increased by 4.4%
MoM and 6.7% YoY respectively. We suspect the increase in sales could be due to the
selling of remaining Viva models with RM5k per unit discount and aggressive sales
campaign. On the other hand, there was a slight drop in Proton sales which dipped by
0.9% MoM and 6.9% YoY respectively. Peroduas market share remained at 32% but
Protons market share fell from 21% to 19% MoM.

Better performance from non national marques. The non national segment increased
by 6.0% MoM. Continental car sales jumped by 25.2% MoM followed by Japanese
marques (+6.0% MoM). Leading the sales growth for Japanese marques were Toyota
and Nissan which saw sales growth of 17.2% and 12.6% respectively. The increased in
Toyota sales were mainly due to aggressive price discounting and new launches such as
Toyota Corolla Altis. However, Honda saw a dropped in sales by 1.0% MoM.

Views and recommendation. We are maintaining our NEUTRAL rating on the sector
with Neutral calls for UMW Holdings (NEUTRAL, TP: RM10.89), Tan Chong Motor
(NEUTRAL, TP: RM5.72) and MBM Resources (NEUTRAL, TP: RM3.00).





Companies Price Market Cap Core Net Profit (RMm) PER (x)
FY13 Div
Yield
ROE
Target
Price
Rating
(RM) (RMm) FY14 FY15 FY16 FY14 FY15 FY16 (%) (%) (RM)
UMW 11.88 12,711.0 986.2 1042.3 1182.
4
12.9 12.2 10.8 4.7% 14% 10.89 Neutral
Tan Chong 5.29 3,290.2 360.0 368.6 374.2 9.1 8.9 8.8 4.5% 9% 5.72 Neutral
MBM 2.96 1,230.7 150.1 161.1 177.6 8.2 7.6 6.9 2.0% 8% 3.00 Neutral






30 July 2014 Sector Outlook: Automotive (Neutral)



www.bimbsec.com.my | 2


Monthly TIV

Source: MAA, BIMB Securities

Market share by origins

Source: MAA, BIMB Securities

Market share of various marques (MoM)

Source: MAA, BIMB Securities


30000
35000
40000
45000
50000
55000
60000
65000
70000
75000
J
a
n
-
1
1
M
a
r
-
1
1
M
a
y
-
1
1
J
u
l
-
1
1
S
e
p
-
1
1
N
o
v
-
1
1
J
a
n
-
1
2
M
a
r
-
1
2
M
a
y
-
1
2
J
u
l
-
1
2
S
e
p
-
1
2
N
o
v
-
1
2
J
a
n
-
1
3
M
a
r
-
1
3
M
a
y
-
1
3
J
u
l
-
1
3
S
e
p
-
1
3
N
o
v
-
1
3
J
a
n
-
1
4
M
a
r
-
1
4
M
a
y
-
1
4
Passenger vehicles Commercial vehicles
`
0% 5% 10% 15% 20% 25% 30% 35% 40%
Japanese marques
Continental marques
American cars
Korean marques
YTD 2013 YTD 2014
PERODUA
32%
HONDA
14%
NISSAN
6%
PROTON
19%
TOYOTA
14%
OTHERS
15%
June 2014

PERODUA
32%
HONDA
15%
NISSAN
5%
PROTON
21%
TOYOTA
12%
OTHERS
15%
May 2014






30 July 2014 Sector Outlook: Automotive (Neutral)



www.bimbsec.com.my | 3


DEFINITION OF RATINGS
BIMB Securities uses the following rating system:

STOCK RECOMMENDATION
BUY Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months.
TRADING BUY Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain.
NEUTRAL Share price may fall within the range of +/- 10% over the next 12 months
TAKE PROFIT Target price has been attained. Fundamentals remain intact. Look to accumulate at lower levels.
TRADING SELL Share price may fall by more than 15% in the next 3 months.
SELL Share price may fall by more than 10% over the next 12 months.
NOT RATED Stock is not within regular research coverage.

SECTOR RECOMMENDATION
OVERWEIGHT The Industry as defined by the analysts coverage universe, is expected to outperform the relevant primary market
index over the next 12 months
NEUTRAL The Industry as defined by the analysts coverage universe, is expected to perform in line with the relevant primary
market index over the next 12 months
UNDERWEIGHT The Industry as defined by the analysts coverage universe, is expected to underperform the relevant primary market
index over the next 12 months

Applicability of ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment
ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the
coverage do not carry investment ratings as we do not actively follow developments in these companies.

Disclaimer
The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for
information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB
Securities Sdn Bhd may from time to time have a position in or either the securities mentioned herein. Members of the BIMB Group
and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The
information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to
ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it
should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and
estimates included in this report constitute our judgements as of this date and are subject to change without notice. BIMB Securities
Sdn Bhd accepts no liability for any direct, indirect or consequential loss arising from use of this report.




Published by



BIMB SECURITIES SDN BHD (290163-X)
A Participating Organisation of Bursa Malaysia Securities Berhad
Level 32, Menara Multi Purpose, Capital Square,
No. 8 Jalan Munshi Abdullah,
50100 Kuala Lumpur
Tel: 03-2691 8887, Fax: 03-2691 1262 Kenny Yee
http://www.bimbsec.com.my Head of Research

The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes
only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB Securities Sdn Bhd may from time to time
have a position in or with the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and
affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are
reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is
accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from theuse of this report. All opin-
ions and estimates included in this report constitute our judgement as of this date and are subject to change without notice..
The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes
only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB Securities Sdn Bhd may from time to time
have a position in or with the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and
affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are
reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is
accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from theuse of this report. All opin-
ions and estimates included in this report constitute our judgement as of this date and are subject to change without notice..
The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes
only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB Securities Sdn Bhd may from time to time
have a position in or with the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and
affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are
reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is
accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from theuse of this report. All opin-
ions and estimates included in this report constitute our judgement as of this date and are subject to change without notice..

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