KUALA LUMPUR: CGS-CIMB Research expects the Malaysian autos sector to post stronger quarter-on-quarter (QoQ) and year-on-year (YoY) earnings in the fourth quarter (Q4) of the 2022 results season, given a record total industry volume (TIV) delivery.
However, the firm said this could be partially offset by higher opex given the depreciation in the ringgit against the US Dollar.
"Nevertheless, we see the recent strengthening in the ringgit against the US Dollar as helping to cushion the impact from lower sales volume in 2023," it said.
CGS-CIMB Research said December 2022 and Q4 2022, TIV grew 18 per cent month on month (MoM) and 10 per cent QoQ, respectively, driven by backlog orders and a gradual production recovery on an easing parts shortage.
Meanwhile, the firm said 2022 TIV reached a new record of 720,000 units, but it projected an 8 per cent YoY drop in 2023 TIV due to the expiry of the sales and service taxes (SST) grace period and softer buyer sentiment.
"Despite the lower TIV outlook, we expect national brands Proton and Perodua to fare relatively better than the non-national segment, given the multiple new launches by national brands in 2023," it said.
Finally, CGS CIMB Research sees the government's decision to defer the new open market value (OMV) excise duty regulations by two years, from 2023 to 2025, as helping to contain the rise in average selling prices and sustain demand in 2023.
"We stay sector Neutral on Malaysian autos.
"Bermaz Auto Bhd (BAuto) is our top pick due to its attractive yields and expanding market share, with the addition of Kia and Peugeot marques," it added.