KUALA LUMPUR: Hong Leong Investment Bank (HLIB) expects the total industry volume (TIV) for the automotive sector to remain strong in the second half (2H) 2024.
This is supported mainly by Perodua's sustained sales deliveries to clear the current 100,000 units of order backlog and still healthy new order intake.
In a research note today, the investment bank has upgraded its TIV forecast to 760,000 units for 2024 from 720,000 earlier.
"Nevertheless, we expect continued stiff competition for the RM100,000-RM200,000 price segment due to normalising of consumer demand and aggressive new launches and sales campaigns.
"Despite the anticipated strong electric vehicle (EV) growth, we reckon its overall market share will still be relatively immaterial," HLIB said.
Meanwhile, the investment bank said it is still anticipating the ringgit to improve to 4.60 against the US dollar by end-2024 with upside bias.
On the other hand, the ringgit has appreciated against Japanese yen in the first half of 2024 to RM2.95 versus 100 yen currently, affected by the still large interest differential and increasing trade deficit.
"We expect automotive-related companies to benefit from the anticipated ringgit recovery against US dollar and the still low yen.
"Major original equipment manufacturers that have major exposure to the US dollar include Toyota (UMW) and Nissan (TCM), and for the yen (include) Honda (DRB) and Mazda (BAuto)," it said.
The investment bank has maintained a "Neutral" stance on the sector as sales would likely normalise downwards into 2025.
Its top picks with "Buy" calls include MBM Resources Bhd with a target price (TP) of RM6.50, DRB-Hicom Bhd (TP: RM1.65) and Sime Darby Bhd (TP: RM3.28). – BERNAMA