Thursday, 5 April 2012

RHB Research maintains Neutral on automotive sector

KUALA LUMPUR (April 5): RHB Research has maintained its Neutral call on automotive sector and said the auto industry made a shaky start to 2012 with total industry volume (TIV) in Jan declining 14.7% and 25.2% month-on-month and year-on-year respectively.

In a note Thursday, the research house said the softer sales were attributed to seasonal factors given the earlier than usual Lunar New Year holidays, the more stringent financing guidelines implemented by Bank Negara Malaysia (BNM) and the lingering effects of component supply disruption arising from the floods in Thailand.

“While the lower-end segment is likely to be the most exposed to the tighter financing environment, we expect the market (borrowers and lenders) to gradually adapt,” it said.

RHB Research said the key event in 2Q12 will be the announcement of the third iteration of the National Automotive Policy (NAP) that could potentially benefit domestic auto parts manufacturers.

“However both Thailand and Indonesia enjoy a strong head start as regional production hubs for numerous global OEMs.

“Still Neutral on the sector. DRB-HICOM and MBM are the top picks,” it said.

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