Monday, 3 August 2015
PETALING JAYA: The Malaysian automotive industry can still hit a total industry volume (TIV) of one million units by 2020 – with the right economic fundamentals and proper incentives in place.
Speaking at a press conference last week, Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad said this target, which was set by the Government, could be difficult to achieve if the annual sales growth continues to taper.
“Achieving one million units by 2020 is a little bit on the high side. But it will depend if there are initiatives such as a scrapping policy or good incentives that can boost sales,” she said.
In 2011, StarBiz, quoting Malaysia Automotive Institute (MAI) chief executive officer Madani Sahari, had reported that TIV could hit one million units by 2020, if certain factors are met.
These include organic TIV growth, rising population, rising disposable income and the continuous need to replace old cars, until 2020.
The MAI is a policy-formulating agency under the International Trade and Industry Ministry (Miti). Miti is responsible for the country’s automotive policy.
TIV hit an all-new high of 605,156 units in 2010, but dropped to 600,123 units in 2011. Since 2012, vehicle sales have been reaching new heights annually, but growth, however, has been tapering.
According to the MAA, TIV is set to record its lowest growth in five years this year – a measly 0.5% to 670,000 units from the 666,465 units achieved last year.
Some industry experts reckon that with the current growth trend over the past few years, the one million unit-mark by 2020 might just be a tall order.
“The automotive sector is hitting saturation point and it would be quite hard to reach that (one million) target in the next five years,” said an industry observer.
However, there are some who believe that the industry is still far from hitting saturation point, and that the one million unit-mark is achievable.
“Economies with a young population will help spur growth for the automotive segment. Therefore, we believe there’s still room for growth,” said an analyst.
“Looking at the country’s demographics, about 40% of the population is below 20 years of age who, once they enter the workforce, will want to buy a car.”
Another analyst noted that there was a close co-relation between gross domestic product (GDP) growth and TIV, pointing out that vehicles sales should continue to grow in tandem with GDP growth.
Vehicle sales in the first half of 2015 fell 3.3% to 322,184 from 333,156 units in the previous corresponding period, mainly due to subdued business optimism and moderation in consumer spending, as a result of the economic uncertainties and increased cost of living.
Stringent lending practices, especially for hire-purchase loans, also had an impact on vehicle sales in the first half of the year.
Maintain buy call with an unchanged target price (TP) of RM1.80. We maintain our buy rating on Pavilion REIT with an unchanged TP of RM1.80, derived from a dividend discount model.
Our high conviction on the stock is underpinned by the sustainability of Pavilion REIT’s existing tenancies; and potential yield accretion from management’s potential move to gear up on the financing of the acquisition of Pavilion Extension (of which we expect to materialise in 2017).
On the near-term outlook, we believe that retail sales are expected to remain resilient despite lower tourist arrivals and inflationary impact subsequent to the goods and services tax (GST) as most shoppers at Pavilion Mall comprise the higher-income segment.
Pavilion REIT’s estimated financial year ending Dec 31, 2015 (FY15E) to FY17E distribution per unit yields remain attractive at 5.7% to 6.6%.
Pavilion REIT’s first half (1HFY15) realised net profit of RM119.8 million (up 6.7% year-on-year, y-o-y) was within consensus and our expectations (49% of our FY15E realised net profit).
Key earning drivers for 1HFY15 were mainly higher average rental income from Pavilion mall (RM21.40 per sq ft, up 4.6% y-o-y); additional contribution from new flagship store openings in 2014 and asset-enhancement initiatives (Beauty Precinct, Couture Pavilion and Dining Loft); and an increase in service charge by 60 sen per sq ft (revised in May 2014).
1HFY15 net property income (NPI) grew 5.9% y-o-y underpinned by approximately 97% revenue generation from the retail mall and 3% from offices. The office rental revenue was 3.7% lower y-o-y, but we note that occupancy rate is picking up — 87% as at second quarter (2QFY15) versus 81% as at end-FY14.
Quarter-on-quarter, revenue and realised net profit were lower by 2.1% and 2.0% respectively, but this is largely due to seasonality and partially pre-GST spending in 1Q15.
A first interim dividend of 4.09 sen has been proposed (2QFY14: 3.65 sen). — AffinHwang Investment Bank Bhd, July 31
SOURCE: [DIGITAL EDGE DAILY] http://ded.theedgemarkets.com/Daily/2015/DEDsetia/DEDsetia_20150803x4phyf.pdf
- This week, the spotlight falls on the burgeoning non-landed market of the Klang Valley’s USJ township. An extension of the matured Subang Jaya township that was started by the same developer, Sime UEP Bhd, USJ has witnessed a slew of new launches over the past few years, with its popularity also buoyed by its access to highways, Putrajaya and Cyberjaya.
- Some of USJ’s notable new developments include the 77-acre One City by MCT Consortium Bhd. Other new developments recently launched include You One, Da Men, The Regina, Empire Remix and The Duo.
- Data analyzed by theedgeproperty.com has yet to reflect these new projects. However, transactions of existing non-landed properties reveal that USJ’s secondary market has seen robust capital appreciation, reflecting its increasing popularity and affordable pricing points.
- Based on theedgeproperty.com’s analysis of transactions, prices in the secondary market have grown remarkably over the past two years. The average transacted price per square foot (psf ) of non-landed residential was RM411 psf in 3Q2014, up 16.8% y-y from RM351 psf in 3Q2013. The preceding year charted even more outstanding price growth, up 34.5% y-y.
- Total transaction volume for the 12 months to 3Q2014 fell 22.5% from 742 to 575 units. Transaction activity in the secondary market is likely to pick up again with the newer developments reflected.
- Most of the existing developments in USJ are located along Persiaran Kewajipan. They are set to benefit from the Kelana Jaya LRT extension which will run along Persiaran Kewajipan and will have 4 new stations in USJ. The newer condominiums are primarily clustered in USJ1 to take advantage of the existing retail and commercial centres.
SOURCE: [Digital Edge Daily] http://ded.theedgemarkets.com/Daily/2015/DEDsetia/DEDsetia_20150803x4phyf.pdf