OSK maintain UNDERWEIGHT call on autos as the bottlenecks in Japan to lead to a shortage of vehicles in Malaysia despite the buoyant demand in the past quarter.
Auto companies’ earnings are likely to be hit in 2Q and 3Q as poor economic efficiency and spiraling raw material prices pinch margins.
OSK expect vehicle sales in the upcoming months to decline gradually and bottom in August or September as vendors and assemblers are starting to hint of depleting inventory.
OSK mid cap BUYs in the sector are Proton and also BUYs on all the autopart makers, with their diversified revenue base, will mostly continue to supply components to the automakers.
Below are the target prices and ratings for selected stocks in automotive sector.
|Stock||Price (RM)||Target (RM)||Market Cap (RM million)||Rating|
Source : OSK Research