Stock Name: UMW
Company Name: UMW HOLDINGS BHD
Research House: CIMB
KUALA LUMPUR: CIMB Equities Research has downgraded the auto sector from Overweight to Neutral as supply risks are emerging.
'Emerging supply risks trigger our downgrade of the auto sector from Overweight to NEUTRAL as we have underestimated the seriousness of the supply situation in Japan,' it said ion its research note on Monday, April 18
CIMB Research cautioned that the protracted delay in resumption of full operations at the auto plants in Japan and the resulting lack of visibility in the supply chain for auto assemblers in Malaysia 2-3 months down the road have raised concerns over their short- to medium-term outlook.
'While demand should stay strong due to firm economic fundamentals and consumer sentiment, supply constraints are likely to put the brakes on domestic sales and throw a damper over the Malaysian auto sector. In addition to cutting earnings numbers for all the stocks by 1-5%, we are downgrading UMW from Buy to Hold as we lower its target price from RM8.80 to RM8.00. Tan Chong remains our top pick,' it said.
Company Name: UMW HOLDINGS BHD
Research House: CIMB
KUALA LUMPUR: CIMB Equities Research has downgraded the auto sector from Overweight to Neutral as supply risks are emerging.
'Emerging supply risks trigger our downgrade of the auto sector from Overweight to NEUTRAL as we have underestimated the seriousness of the supply situation in Japan,' it said ion its research note on Monday, April 18
CIMB Research cautioned that the protracted delay in resumption of full operations at the auto plants in Japan and the resulting lack of visibility in the supply chain for auto assemblers in Malaysia 2-3 months down the road have raised concerns over their short- to medium-term outlook.
'While demand should stay strong due to firm economic fundamentals and consumer sentiment, supply constraints are likely to put the brakes on domestic sales and throw a damper over the Malaysian auto sector. In addition to cutting earnings numbers for all the stocks by 1-5%, we are downgrading UMW from Buy to Hold as we lower its target price from RM8.80 to RM8.00. Tan Chong remains our top pick,' it said.
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