In its Equity Beat publication today, the research house said the new NAP might focus on further liberalisation of the automotive sector to attract high-tech automotive component makers to invest in Malaysia in order to catch up with Thailand’s motor industry in terms of growth and export volume.
“One of the key areas being looked into by the government is the opening up of the lucrative 1.8 litre segment.
“We also gather that the government, together with consultants and industry players, are currently reviewing their efforts to boost investment in manufacturing hybrids and electric vehicles,” it said.
Meanwhile, MIDF Research said vehicle sales were expected to pick up starting second quarter 2012 as the automotive supply chain normalises and the market becomes accustomed to a tighter lending regime introduced by Bank Negara Malaysia in January.
“We now believe that our 2012 total industry volume forecast of one per cent year-on-year or 611,140 units in 2012 is within reach.
“We expect the higher sales from the second quarter to neutralise the relatively weak first quarter numbers. However, we remain cautious of the downside risks to our numbers,” it said.
The research house upgraded its sector call to “neutral” and said: “We will only be upgrading to ‘positive’ if there are concrete evidence that demand momentum can be sustained.”
Its top pick “buys” are UMW and MBM Resources at target prices of RM8.80 and RM3.40 respectively, while Tan Chong remains a “neutral” at RM4.30.