KUALA LUMPUR: Affin Hwang Capital expects the automotive sector to consolidate in the next two years to find its footing in the industry and provide after sales services within the electric vehicle (EV) supply chain.
Affin Hwang said based on its channel checks with the auto and autoparts companies under its coverage, every company had formulated its own strategies and initiatives within the EV supply chain.
"In the next couple of years, we expect the sector to consolidate in order to find its footing in the industry on the degree of involvement within the manufacturing, assembling, distributing and providing after sales services within the EV supply chain.
"Moreover, we are also seeing increasing support from other industrial and energy players to implement EV charging infrastructures," it said.
Affin Hwang said opportunities within the EV supply chain ranged from localisation of critical components to EV interoperability centres and the building of charging station infrastructure.
It said the National Automotive Policy (NAP) 2020 was expected to drive next generation vehicles (NxGV), mobility as a service (MaaS), and industrial revolution 4.0 (IR4.0).
"Hence, the Malaysia Automotive, Robotics and IoT Institute (MARii) is working closely with industry players from the original equipment manufacturers (OEM) manufacturers to the service based players to leverage the use of technology for better products and equipment performance.
"This also includes formulating new incentive mechanisms with strategies until 2035 to boost the acceptance of EVs," it said.
Affin Hwang has maintained "Neutral" rating on the sector with "Buy" calls for Bermaz Auto Bhd and MBM Resources Bhd.
"The upside/downside risks to the sector are further/no extension of sales tax exemption after June 30 2022, improvement/worsening of microchip supply, smooth/bottleneck operations in the supply chain, and favourable/unfriendly policies to drive EV adoption," it added.