KUALA LUMPUR: RHB Investment Bank Bhd (RHB Research) has revised up its 2024 total industry volume (TIV) forecast for the auto and autoparts sector to 740,000 units, from 625,000 units previously, mainly due to the revision of Perodua's financial year 2024 (FY24) forecasted volumes on the back of stronger-than-expected sales.
On a year-on-year (YoY) basis, the sector will post stronger sales volume in the second quarter of 2024 (Q2 2024) due to the low base, while Perodua, which makes up more than 40 per cent of TIV year-to-date, charted a 20 per cent YoY growth in May.
It is, however, noted that the auto and autoparts sector is expected to see a seasonally weaker TIV in the second quarter of 2024 (Q2 2024) due to the shorter working quarter given the Aidilfitri festive period as well as other public holidays observed.
"Regardless, we keep our view that the sector is seeing a cyclical downturn in sales volumes after two record-breaking years. Hence, we anticipate a meaningful TIV decline in the second half of 2024 (2H24) as backlogs continue to taper off while sales normalise," it said.
RHB Research maintained "neutral" on the sector, premised on a weaker TIV performance as normalisation of sales volumes takes place, likely in 2H24.
It added that the auto sector missed expectations as both Sime Darby Bhd and Tan Chong Motor Holdings Bhd fell short of expectations while MBM Resources Bhd beat expectations.
"Post-acquisition of UMW Holdings Bhd, Sime Darby's earnings were dragged down by higher-than-expected interest costs on top of weaker-than-expected associates' contributions, while TCM started off FY24 with continuing losses.
"MBM's earnings outperformed expectations, thanks to stronger Perodua sales during the quarter, up nine per cent YoY.
"Bermaz Auto Bhd closed its FY24 books with another year of record high earnings, thanks to its solid Mazda sales volumes (+18 per cent YoY)," it added.
Bermaz Auto remained the firm's top pick as it likes the company's dividend yield and believes its car sales should remain resilient versus those of other marques.
Meanwhile, it noted major marques such as Perodua and Toyota have seen declines in their order backlogs, from 128,000 and 28,000 in end-December 2023 to 100,000 and 20,000 currently.
"Perodua is eyeing a sales volume of 330,000 units this year, comparable to last year's 330,325 units.
"Considering that Perodua has achieved volume growth of 20 per cent YoY YTD, we believe the target is achievable. We have revised up our 2024 Perodua sales assumption accordingly to 330,000 units from 250,000 units previously," it added.