RHB Research - Automotive Sector Update (19 April 2012)

Stock Name: MBMR
Company Name: MBM RESOURCES BHD

Research House: RHB

Price Call: BUY

Target Price: 5.05

Stock Name: TCHONG
Company Name: TAN CHONG MOTOR HOLDINGS BHD

Research House: RHB

Price Call: HOLD

Target Price: 4.60

Stock Name: DRBHCOM
Company Name: DRB-HICOM BHD

Research House: RHB

Price Call: BUY

Target Price: 3.45

Sector Update

Motor ' A Gradual Recovery                                                                                               Neutral

Sector Update

MBM Resources ' Fair value RM5.05                                                                           Outperform

Tan Chong ' Fair value RM4.60                                                                             Market Perform

DRB-HICOM ' Fair value RM3.45                                                                                  Outperform

• Auto sales for Mar of 53,583 units were 21.7% higher mom (-15.3% yoy) that marks the second consecutive mom gain. TIV for 1Q12 reached 138,544 units, down 12.5% yoy and 7.6% qoq.
• The MAA attributed the improved sales to positive consumer sentiment, the introduction of new models and a longer working month and expects the sales trend for Apr to be similar.
• Combined with the lingering effects of the stricter financing guidelines, nearly all marques continue to show yoy sales contraction with the exception of Toyota .