News regarding of Automotive Sector..
KUALA LUMPUR, July 19 (Bernama) -- OSK Research has retained its neutral call on the automotive sector while maintaining its forecast on total industry volume (TIV).
In its research note Tuesday, the agency said it will keep the Buy recommendation on both automotive company MBM Resources at a fair value (FV) of RM3.80, as they see a pick-up in demand for the new Myvi in the second half of the year, and spare part producer EP Manufacturing (FV:RM1.38) as they see encouraging delivery of autoparts, component kits, and the stamping of body structures for the new Myvi to Perodua.
As for other automobile producers, it said:
"We have a sell on both UMW (FV:RM6.60) and Tan Chong (FV:RM4.27), given their rich valuations against the backdrop of risk of further earnings weakness on poor plant utilisation in the second quarter," said the research house.
However they have upgraded their call on Delloyd Ventures to buy from neutral given the upside of more than ten per cent and also retained the buy call on New Hoong Fatt with an unchanged FV of RM3.80.
A for the TIV volume, OSK Research said that with the first year numbers making up 49.7 per cent of their full-year TIV forecast of 597,456 for 2011, they would continue to retain their full year TIV forecast.
"We expect sales to pick up momentum in July and August ahead of the Hari Raya delivery rush before softening towards year-end as buyers would be more inclined to defer their vehicles purchases to 2012 to capture a higher resale value.
"We also think that the impact of recent amendments to the Hire Purchase (HP) Act would only be a knee-jerk reaction as the government has taken measures to rectify the situation to smoothen the sales delivery process."
On Monday, the Malaysian Automotive Association (MAA) revised downwards, its industry sales forecast for this year to 609,000 units, from an earlier estimate of 618,000.
It had cited the interruption in supply following the earthquake and tsunami disasters in Japan and amendments to the Hire Purchase Act 1967 as factors for downward revise.
Source: Bernama
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