AmResearch has re-affirmed its "buy" call on automotive component manufacturer, APM Automotive Holdings Bhd, on the
expectation of higher car sales in the second half of this year and the introduction of a new model by Nissan. It also maintained APM's fair value at RM6.50 a share.
The research house said a key issue in the second quarter financial year 2012 was the contraction in production, particularly at Perodua and Proton, which collectively accounted for 63 per cent in the first half of this year's total industry production.
It said the contraction was due to initial production hiccups for Proton Preve and DRB-Hicom's decision to downsize Proton's inventory upon acquisition in March while Perodua underwent a week-long plant maintenance during the period.
"We expect production to catch up with strong sales in the second half of this year, given the sustained demand visibility and normalisation of channel inventories," it said in a research note today.
AmResearch said the introduction of Nissan Almera, expected in the fourth quarter of this year, would provide a significant boost for APM in the period given that Nissan was targeting 10,000 booking bank ahead of the official launch.
"Furthermore, given its status as a sister company, APM derives up to 40 per cent higher revenue per car set from Nissan compared to supplies to a key customer like Proton on our estimates," it added. -- Bernama
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