KUALA LUMPUR, Jan 27 — MIDF Research (MIDF) has maintained its positive rating on the automotive sector, making a ‘buy’ call on UMW Holdings Bhd (UMW) with a target price (TP) of RM4.35 per share and MBM Resources Bhd (MBM Resources) (TP RM3.87).

It said the two companies are key listed plays into Perusahaan Otomobil Kedua Sdn Bhd (Perodua), as both UMW and MBM Resources owns 38 per cent and 22.6 per cent of Perodua, respectively. 

“The latter provides a cheaper entry at 6.3 times financial year 2022 forecast price earnings ratio and is more leveraged to Perodua earnings (estimated at 69 per cent of group earnings),” said MIDF in a note today.

MIDF projected a 2022 sales volume target of 240,000 units for Perodua, which is slightly more conservative than the car maker’s target of 247,800 units, in line with its more conservative overall total industry volume (TIV) target.

“Perodua is targeting a more than 30 per cent year-on-year growth in sales volume to 247,800 units in 2022, based on an assumption of an expansion in market share to 40.6 per cent this year from 37.4 per cent in 2021, as well as a TIV assumption of 610,000 units for 2022.

“All in all, Perodua’s sales target is a positive surprise and might suggest upside risk to our forecasts, but more importantly, it underpins our positive call on the auto sector,” added MIDF.

MIDF also reiterated its “buy” call on Bermaz Auto Bhd with the TP of up to RM1.98 per share, based on the company’s volume expansion and aggressiveness in electric vehicle (EV) launches to capitalise on EV incentives.


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