Stock Name: UMW
Company Name: UMW HOLDINGS BHD
Research House: INTER PACIFIC
UMW Holdings Bhd
(July 6, RM6.34)
Reiterate neutral at RM6.24 with target price of RM6.40: The worldwide recall of eight of Toyota's luxury Lexus and Crown Sedan models for an engine fault could affect up to 270,000 cars.
The defective V8 (4.6-litre) and V6 (3.5-litre) engines were installed in eight top-line models, including some hybrids ' Lexus LS460, Lexus LS600h, Lexus LS600hL, Lexus GS350, Lexus GS450h, Lexus GS460 and Lexus IS350 as well as Toyota Crown sedans. The models marked by 'h' are gasoline-electric hybrids.
UMW Toyota Motor will conduct a service campaign to address the improper functioning of valve springs found in some of the V8 (4.6-litre) and V6 (3.5-litre) engines manufactured between August 2006 and July 2008. Because of the defect, there is a small possibility of abnormal noise or unstable idling, and in rare cases the engine could shut down while driving.
There are about 100 units of Lexus LS460 affected in Malaysia. UMW Toyota Motor will notify all owners and will carry out the necessary corrective measures. All other Lexus or Toyota models are not involved. We believe the amount spent on the campaign will not be substantial, given that Lexus sales account for a small fraction, 0.6%, of Toyota's total sales. In our view, however, the recall could adversely affect Toyota's reputation and possibly its market share, as well as dampen the excitement over its upcoming models.
Our FY10-FY11 forecast remains intact. We reiterate neutral with our target price remaining at RM6.40.
We used SOP valuation with the implied FY10 PER for UMW's automotive division at 13 times, oil and gas division at 15 times and manufacturing and equipment division at 10 times. ' Inter-Pacific Research, July 6
''
This article appeared in The Edge Financial Daily, July 7, 2010.
Company Name: UMW HOLDINGS BHD
Research House: INTER PACIFIC
UMW Holdings Bhd
(July 6, RM6.34)
Reiterate neutral at RM6.24 with target price of RM6.40: The worldwide recall of eight of Toyota's luxury Lexus and Crown Sedan models for an engine fault could affect up to 270,000 cars.
The defective V8 (4.6-litre) and V6 (3.5-litre) engines were installed in eight top-line models, including some hybrids ' Lexus LS460, Lexus LS600h, Lexus LS600hL, Lexus GS350, Lexus GS450h, Lexus GS460 and Lexus IS350 as well as Toyota Crown sedans. The models marked by 'h' are gasoline-electric hybrids.
UMW Toyota Motor will conduct a service campaign to address the improper functioning of valve springs found in some of the V8 (4.6-litre) and V6 (3.5-litre) engines manufactured between August 2006 and July 2008. Because of the defect, there is a small possibility of abnormal noise or unstable idling, and in rare cases the engine could shut down while driving.
There are about 100 units of Lexus LS460 affected in Malaysia. UMW Toyota Motor will notify all owners and will carry out the necessary corrective measures. All other Lexus or Toyota models are not involved. We believe the amount spent on the campaign will not be substantial, given that Lexus sales account for a small fraction, 0.6%, of Toyota's total sales. In our view, however, the recall could adversely affect Toyota's reputation and possibly its market share, as well as dampen the excitement over its upcoming models.
Our FY10-FY11 forecast remains intact. We reiterate neutral with our target price remaining at RM6.40.
We used SOP valuation with the implied FY10 PER for UMW's automotive division at 13 times, oil and gas division at 15 times and manufacturing and equipment division at 10 times. ' Inter-Pacific Research, July 6
''
This article appeared in The Edge Financial Daily, July 7, 2010.
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