Wednesday, April 27, 2011

Malaysia Auto Sector: UOB Kay Hian Research maintains Market Weight

KUALA LUMPUR: UOB Kay Hian Research is maintaining its MARKET WEIGHT rating for the Malaysian automobile sector while its checks showed that Toyota and Nissan sales are least affected.

It said on Wednesday, April 27 that UMW Holdings may have Toyota inventories lasting until Sept 11.

'In its latest guidance, UMW is still targeting an aggressive 90,000 units of sales this year, which is only 5% below our current forecast. This could result in minimal 3% reduction in our 2011F forecast net profit,' it said.

UOB Kay Hian said UMW's 38% associate, Perodua could be among the more affected, with inventories lasting till only June 2011.

'Due to the varying degree of impact between UMW's consolidated vehicle division and Perodua, we have presented two separate scenarios for UMW below. Proton was lucky to have received a shipment that left Japan just before the earthquake struck, and should be insulated until July to August 2011,' it said.

The research house said it checks also indicate that car companies are stretching out their delivery over a longer period in order to manage customer expectations.

'We do not rule out the possibility of car makers going into overtime production to catch up on orders, and some 2011 bookings getting pushed into 2012 delivery,' it said.

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