8/12/2019 IST25030

1/7

See imp

Aut

NA

Alexan

alexand

ortant disclos

2014

der Chia+60

r.chia@rhbgro

ures at the en

akes a

3 9207 7621

up.com

of this report

Bow

Th

so

si

w

m

au

Compa

APM

Berjaya

DRB-HI

MBM

Tan Cho

UMW^

Source:

e announc

mewhat anti

nalled to t

ether the g

ore significa

to parts ind

To establiof the Natiautomotivethe head sThailand alcost greenEEV and wefficiencyallowed toon engineincentivesand lower150,000 joand raise t

Hybrid animported (

now only bExisting stexemptionvolume inqualify forCKD hybri

NAP not ais an impordirection foof attractinhelping tothe operatiremain chaintense macould impa

see few caDRB-HICO

y

M

Auto^ M

OM^ M

M

ng M

M

Company data, R

ment of th

-climactic as

he market.

lobal OEMs

nt investmen

stry will tak

h Malaysia

nal Automoti hub for enertart that Thailready has ancar programill be technol(and emissioestablish procapacity and

will also be o taxes. By 2

s, double thtal industry v

EV tax exeBU) hybrid

e available forocks of hyb. UMW will2013 comprithe tax breakmodel in Ma

near-term r

tant documer the industry,FDIs from gngineer lowe

ing environmllenging. Whirket competitt margins. O

alysts to re-rM, Berjaya A

Price

YR5.72

YR1.85

YR2.77

YR3.41

YR5.60

R11.58 M

HB Estimates ^F

Po

e National

the key poli

he succes

are sufficie

ts in Malaysi

time to mat

s a regional

e Policy (NAgy-efficient vland and Ind eco car inie. The NAP

gy agnosticns) hurdles.uction faciliti/or selling pffered. This c020, the Nexports of plume to 1m

mptions scrnd EV vehicl

such vehiclerid and EVe adverselyed of CBU

s. The Hondlaysia.

-rating catal

t that will getwe believe tlobal OEMs,r car pricesent for autole we expection and incrverall, we thi

te the sectorto and Tan C

Target

YR5.50

YR1.95

YR3.40

YR3.40

YR7.25

YR12.50

Y14 valuations re

wered by Enhanced

Sector Upd

Neut

Automot ive

cy thrusts ha

of the pol

tly convinc

a. The trickl

erialise. NEU

hub for EE

P) is to makeehicles (EEV)nesia have

itiative while Idefines whatn how manuf

Manufactures for EEVs

rices while uuld includeP targets to

arts and comehicles (201

pped.The tles has been

that are loc will continaffected ashybrid modelJazz Hybri

yst for the s

the ball rollinat the fruits f

revitalising aill take timeotive manuf

domestic deasingly pricek the sector

higher. We rhong. NEUT

FY14FP/E (x)

FP/

8.6 1

11.4

13.3

9.1

9.3

13.2

fer to FY15 data

Datasystems EFA

ate, 21 Janu

al (Maint

MacroRisksGrowthValue

Policy (NA

d already be

icy will dep

d to begin

-down impa

TRAL.

s.The core

Malaysia the, so as to clstablished.ndonesia haexactly constacturers meers of EEVsithout any rendefined cu&D grants, s generate aponents to M: 652,120 uni

x exemptiondiscontinued

lly-assemblee to enjoybout 6% of

ls that will n is currently

ector.While

g in setting trom the NAPtomotive expo realise. Meacturers in 2

and to stay-sensitive coaluations are

tain our BUYAL.

14FB (x)

NetYield(%)

.09 3.8 N

3.9 2.2

0.7 1.5

0.9 2.9 N

1.5 2.1

2.1 5.2 N

Platform

ry 2014

ained)

P) was

en well-

end on

making

t to the

bjective

regionalw backote thata low-

itutes anthe fuelwill betrictionstomisedft loans

dditionalYR10bn,ts).

for fully-and will

(CKD).the taxits sales

longerthe only

the NAP

e policyin termsorts andanwhile,014 willresilient,nsumersfair and

calls on

Rec

EUTRAL

BUY

BUY

EUTRAL

BUY

EUTRAL

8/12/2019 IST25030

2/7

Auto21 Jan

See imp

NA

ary 2014

ortant disclos

2014

ures at the en of this report

To estabNationalenergy efIndonesiawhile Indexactly cmeet the

allowed tengine caincentivetargets toexports ovehicles (

Hybrid a(CBU) hyfor such vwill contin6% of itslonger quhybrid mo

Backtrac

NAP hadfranchisestudy toautomotiv

Introductcontain aare suppdefinitionrequire thEuro 4 fu

Car prictowards afor car pricombinedlocal valu

savings a

Reducedmean incthat it hapowertraisystems.raise provolume.

Figure 1

i. Promocompan

ii. Make

iii. Prom

iv. Promv. Promautomotvi. Safeprices

Source: MI

lish Malaysiutomotive P

ficient vehicle have establionesia hasnstitutes anfuel efficien

o establishpacity and/or. This couldachieve by 2parts and co2013: 652,12

nd EV tax ebrid and EVehicles that aue to enjoy t

sales volumealify for the tdel in Malays

king on NA

proposed forAPs by 2020 assess thee industry. N

ion of Euroy details on

osed to meeis only basede availabilityl will be ann

e reductionchieving a 2ces to declin with OEMse add. The a

cross to end-

protection feased compbeen invests, a new en

Protons forthuction volu

: Objectives

te a competitiveies

Malaysia as reg

ote increase in v

ote increase inte participation

ive industryuard consumer

ITI

a as a regiolicy (NAP) iss (EEV), soished. Note t low cost gEEV and willy (and emis

anufacturingselling priceinclude R&

020, the genmponents to0 units).

xemptions sehicles has bre locally asshe tax exems in 2013 wex breaks. Th

ia.

2009 initiat

the terminati. The Governimpact of thitime frame

4 fuel still phe introductit both efficieon fuel efficif Euro 4 fuelunced later t

framework.-3% reductio, a competitivtaking advanchievement

sers will be c

or Proton.Thtition for Proting in R&D aine family a

coming globae to achiev

of NAP 2014

and sustainable

ional automotive

alue-added acti

xports of vehiclof Bumiputera c

interest by offe

nal hub forto make Malas to claw baat Thailand

reen car pr be technolosions) hurdle

facilities forand offers m grants, softration of an

MYR10bn an

crapped. Theen disconti

embled (CKDtions. UMWre comprisede Honda Jaz

ive to aboli

n of open ament has nos terminationas given for t

ending. Then of Euro 4ncy and emiency (by vehi. We believeis year.

The Govern in car pricee industry enage of EEVf lower effec

ritical in drivi

e implementon in the coctivities involwell as hybl small car (P improved e

domestic auto

hub in energy e

ities in a sustai

s and automotimpanies in the

ring safer and b

EEVs. Theysia the regiok the head s

already hasgramme. Thy agnostic o

s. Manufactu

EEVs withonufacturers u loans and ldditional 15raise total in

e tax exemptued and will). Existing sto

ill be adverof CBU hybrz Hybrid is c

h APs? The

proved permidecided to u of Bumiputrhe conduct o

NAP 2014 arade fuel (pe

issions hurdlcle category)he time fram

nment reiterby 2017. Wironment ne

incentives anive duties an

g down car p

tion of the Ning years. Pring the deveid and other2-30A) will beconomies of

otive industry in

fficient vehicles

able manner

e componentstotal value chain

etter quality pro

core objectivnal automotitart that Thailn Eco care NAP definn how manurers of EEV

t any restricndefined cuwer taxes. T,000 jobs, dodustry volum

ion for fully inow only becks of hybridely affectedid models thrrently the o

2009 iteratio

ts (APs) by 2ndertake ana participatiothis study.

nnouncemenrol and dieses. The curr

as emissionfor the avail

ted its cobelieve thatds to be encd raising thed the transm

rices.

P 2014 initiaton recentlylopment of aalternative prcritical to enscale and li

cluding the natio

(EEV)

of the domestic

ucts at competit

2

e of thee hub inand andinitiativees whatacturers

will be

tions ontomizedhe NAPuble thees to 1m

mportedvailable

and EVss aboutt will nonly CKD

n of the

015 andin-depthn in the

did notl). EEVsnt EEVhurdles

ability of

mitmentin orderuraged,level of

ission of

tives willrevealeddvancedopulsionble it to

t export

nal car

ive

8/12/2019 IST25030

3/7

Auto21 Jan

See imp

ary 2014

ortant disclosures at the en of this report

Figure

Technispecifi

Fuel eff

Carbon

Engine

Emissio

Safety r

Source: MI

Figure

Investm

Investm

Product

Excise t

Source: MI

Figure

Item

Fuel ec

Targettype

Tax bre

Price co

Source: MI

: Thailands

alation

iciency

emission

capacity

n standard

egulation

ITI

: Thailands

ent criteria

ent (min)

ion per annum

ax incentives

ITI

: Indonesia

Lo

nomy

ehiclePetr

Dies

ak 0% (

ndition

Off t(MY

Exclvehi

ITI

eco car tech

Ph

Less tha

Less tha

1.3L or sm

ba1.4L or sm

ba

EURO 4

Co

eco car inve

THB5

(min) 100,0

17% (

low-cost gr

Cost GreenPlan

20km/L a

ol car: 1.0 - 1.2L

el car: 1.0 - 1.5L

currently at 10%

he road price ofR 25,500)

uding ownershipcle tax and local

nical specs

se 1

5L/100km

n 120g/km

aller (petrol-

sed)aller (diesel-sed)

or higher

pliance to R94

stment criter

Phase 1

bn (MYR0.51bn

00 units

normal at 30%)

een car

ar (LCGC)

nd more (NEDC:

)

IDR95m

transfer fee,tax

Less

Les

1.3L or s

1.5L or s

EU

nd R95 (front a

ia

) THB6.5

100,000

14% (no12% (forengine)

Low Carbo

New European

Passenger car

PV, DV, HV, EvehiclesFE 20-28km/L:20-75%)

FE 28km/L and(currently 20-7

Electric vehicle

Not applicable

Phase 2

than 4.3L/100k

s than 100g/km

maller (petrol-ba

maller (diesel-b

RO 5 or higher

nd side impacts)

Phase 2

n (MYR0.66bn)

units

rmal at 30%)E85 compatible

n Emission Pr(LCEP)

Driving Cycle)

, alternative fu

25% reduction (

more: 50% red%)

: 0%

3

sed)

sed)

oject

l

currently

uction

8/12/2019 IST25030

4/7

Auto21 Jan

See imp

ary 2014

ortant disclos

Fig

Sour

Fig

Sour

ures at th e en

re 5: Malay

ce: MITI

re 6: Malay

Segment

A

B

C

D

E

F

J

Others

ce: MITI

of this report

ias EEV def

ias EEV spe

De

Micro car

City car

Super mini c

Small family

Large family

Compact ex

Executive ca

Luxury car

Large 4x4

Others

inition

cifications

scription

r

car

car

cutive car

r

Curb weight (k

< 800

801 - 1,000

1,001 - 1,250

1,251 - 1,400

1,401 - 1,550

1,550 - 1,800

1,801 - 2,050

2,051 - 2,350

2,351 - 2,500

) Fuel efficien

1

1

1

cy (L/100km)

.5

.0

.0

.5

.0

.5

1.0

1.5

2.0

4

8/12/2019 IST25030

5/7

Auto21 Jan

See imp

Figur

Pass

Total

Total

Expor

Com

Total

Moto

Total

Source:

Figur

Stock

APM

BerjayaAuto^DRB-HICOM

MBMTan Ch

UMW

Sector

Source:

ary 2014

ortant disclos

7: NAP 201

enger car

production vol.

industry vol.

ts

ercial vehicl

production vol.

rcycle

production vol.

MITI

10: Sector t

Price

(MYR

5.72

1.85

^2.77

3.41ong 5.60

11.58

Avg

Company data,

ures at th e en

targets

able

FairValue(MYR)

5.50

1.95

3.40

3.40

7.25

12.50

HB estimates ^F

of this report

2020

U

1.25m

1.0m

250,000

U

100,000

U

800,000

Mkt Cap F

(MYRm)

1,153.2 D

1,488.8 A

5,355.1 M

1,330.6 D

3,763.2 D

13,528.8 D

Y13-14 valuation

2013

nits

~0.57m

~0.65m

~20,000

nits

~55,000

nits

~430,000

E EPS gro

(%)

FY13

ec 1.2

pr 83.6

ar 57.3

ec 1.6

ec 69.9

ec (15.8)

32.9

refer to FY14-15

Figure

Incent

InvestCondit

Safety

Figure

Item

Soft l

Develo

Comp

Comp

Establi

Develo

Total

Grant

Huma

Bumip

Total

Source:

wth

FY14 FY1

13.1 9.7

25.0 14.

57.1 20.

16.1 10.

46.5 13.

27.5 16.

30.9 14.

data

8: NAP 2014

ives

mention

9: NAP 2014

an

pment of tools,

nent technology

titiveness relate

shment of distrib

pment of EEV in

capital develop

utera developme

ITI

PER

(x)

3 FY14

8.6

11.4

13.3

9.1

9.3

13.2

10.8

EEV incenti

Customized ias:

-PS, ITA

-Grants (Rese

-Infrastructure

-Lower Taxes

-Expatriates

NoneGradual compl(WVTA)

funds alloc

ies and mould

pre-commercia

d activities

ution infrastruct

frastructure

ment

nt

P/B P/

(x) (x

FY14 FY

1.09 4.

3.93 12

0.70 2.

0.85 24

1.51 8.

2.06 7.

1.69 9.

es

centives for bo

rch & Developm

Facilitation

iance to Whole

tion

lization

ure

F ROE

) (%)

14 FY14

1 13.3

.1 34.6

9 5.6

.7 10.2

7 17.4

4 16.0

9 16.2

th FDI and DDI

ent, Training)

ehicle Type Ap

MYR

765

575

295

125

130

1,890

100

75175

NDY

(%)

FY14

3.8 NE

2.2

1.5

2.9 NE

2.1

5.2 NE

3.0

5

such

roval

Rec

UTRAL

BUY

BUY

UTRALBUY

UTRAL

8/12/2019 IST25030

6/7

RHB Gu

Buy:ShTradingNeutral:Take PrSell:ShNot Rat

Disclos

All reseawarrantyto transainformatinot haveinformatifinancial

RHB, itssecuritiemateriallin this remay sellunderwriresearch

RHB anfrom anare allegThe terand shal

All Rightconsent

Malaysi

This rep50400 KBerhad.

Singapo

This repPartnersBank Beowned sPartnersreport is

As of 20positiona) -

As of 20a) -

Special

Where tto "Institan "Instireport inPartnersHong K

This repKong Lireferred

RHBSHRHBSHcompen

ide to Investm

are price mayBuy:Share priShare price mfit:Target pricre price may fd: Stock is not

re & Disclaim

rch is based on, express or imct any securitieion purposes oregard to the sion of addresseadvice to inde

affiliates and rs of the compay interested insearch report athem or buy thiting services foreport.

its employeesreliance baseed to have aris

RHB shall dl refer to RHB

s Reserved. Thof RHB and RH

rt is publisheduala Lumpur, a

re

rt is publishedSecurities Pterhad, Malaysiaubsidiary of RHSecurities Ptetherefore class

January 2014,in the securiti

January 2014,

Distribution b

e research reputional Investorutional Investoits entirety. In rSecurities Pte

ng

rt is publishedited), a subsid

to as RHBIB),

, RHBIB and/o, RHBIB and/oation for invest

ent Ratings

xceed 10% ovce may exceedy fall within the has been attll by more thanwithin regular

er

material compplied, as to its as or financial inly. It is intendepecific investmes only and isendently evalu

lated companiy(ies) coveredny such securi

nd may from tim from custo

r or relating to

and/or agentson this reportn due to the c

note where apesearch Institu

is report is for tB accepts no li

and distributedwholly-owned

and distributedLtd, a joint venwhich have sinB Capital BerhLtd may have rified as a non-i

DMG & Partnes covered in th

none of the an

RHB

ort is produced", "Expert Inve", "Expert Inveespect of anyLtd.

and distributediary of OSK Invwhich in turn i

r other affiliater other affiliatement banking

r the next 12 m15% over therange of +/- 1ined. Look to a10% over the

research cover

iled from data cccuracy, complstruments whetd for circulationent objectives,ot to be taken iate the particul

s, their respecin this researcities. Further, R

e to time act aers on a princiuch company(i

do not accept aor further comntents of such

plicable, the relte Sdn Bhd, its

he use of intenability whatsoe

in Malaysia byubsidiary of R

in Singapore bure between Dce merged intod). DMG & Pa

eceived compedependent rep

rs Securities Ptis report, excep

lysts who cove

by an RHB entstors" or "Accrtor" or "Accredatters arising f

in Hong Kongestment Banka wholly-own

may beneficiamay, within thervices from th

onthsext 3 months,% over the neccumulate at lonext 12 monthsge

onsidered to bleteness or corrher referred toto the clients oinancial situatin substitution fr investments

ive directors, areport or any

HB, its affiliatess market makepal basis and mes), as well as

ny liability, be itunication give

report or comm

evant entity disholding compa

ed recipients oer for the actio

RHB ResearchB Investment

y DMG & Partnutsche Asia P

RHB Investmertners Securitiensation from thort.

Ltd and its sut for:

red the securiti

ity (excluding Ddited Investorsited Investor", trom, or in conn

by RHB OSK Serhad, Malaysid subsidiary of

lly own a total opast 12 mont

e subject comp

however longert 12 monthswer levels

reliable at theectness. No paherein or otherf RHB and its rn and the partir the exercisend strategies.

sociates, connecurities relateand related cor or have assuay also perforolicit such inv

directly, indiren in relation to tunication bein

ributing the reny, affiliates, su

nly and may nns of third parti

Institute Sdnank Berhad (

ers Researchcific Holdingst Bank BerhadPte Ltd is a Mcompany cov

bsidiaries, inclu

es in this report

MG & Partners" as defined in this research rection with this

ecurities Honga which have sRHB Capital B

f 1% or more os, have receiv

any.

-term outlook r

time of writing,rt of this reportise. This reporlated compani

cular needs off judgment by

ected parties ad thereto, andmpanies do aned an underwror seek to perstment, adviso

tly or consequhis report, incluperceived as

ort in the particbsidiaries and

t be reproduces in this respe

hd (233327-M)HBIB), which i

te Ltd (Reg. NPte Ltd (a subsi(the merged eember of the Sired in this rep

ding DMG & P

has an interes

Research Ptehe Securities aort is not inten

research report

Kong Limited (ince merged intrhad.

f any class of cd compensatio

mains uncertai

but RHB doesis to be construt is general in ns. Any recomny specific ad

addressees, w

nd/or employeay from time tseek to do bu

iting commitmeform significantry or other serv

ntial losses, loding where sucefamatory in n

ular jurisdictionrelated compan

, distributed ort.

, Level 11, Towturn is a wholl

. 200808705N)diary of Deutsctity is referred

ingapore Exchrt for its corpor

rtners Researc

in such securi

Ltd) and distribnd Futures Act,ed for you and

, you are to co

RHBSHK) (foro RHB Invest

mmon equityn and/or within

in

not make any red as an offerature and hasendation contressee. This reo should obtai

s may own or ho time add to, osiness with thent in securitiesinvestment ba

ices from any e

ss of profits orh losses, lossture.

mentioned speies.

published for

er One, RHB Cy-owned subsi

, a wholly-ownhe Bank Groupto as RHBIB,nge Securitiesate finance or it

h Pte Ltd do n

ies, except for:

ted in SingapoCAP. 289 of Syou should distact our Singa

merly known asent Bank Berh

ecurities of thethe next 3 mon

presentation or solicitation ofeen preparedined in this repport is for theseparate lega

ave positions ir dispose off, o

company(ies)of such compaking, advisory

ntity mentioned

amages thatf profits or da

cifically herein

ny purpose wit

entre, Jalan Tuiary of RHB C

d subsidiary of) and OSK Invwhich in turn isTrading Limites dealing activi

t have propriet

re, it is only disingapore. If youregard this resore Office, DM

OSK Securitied (the merged

subject compaths seek to obt

6

ran offerorort does

l or

r may beoveredy(ies),orin this

ay ariseages

below

hout prior

n Razak,pital

DMG &stmenta wholly-. DMG &ties; this

ry

tributedare notarch

G &

s Hongentity is

ny.in

8/12/2019 IST25030

7/7

Risk Di

The priclossesdoes noIndones

This repsubsidia

subsidiaThailan

This repsubsidiasubsidiaOther J

In any otregulati

(form

closure State

s of securitiesill be incurred rmaintain a pre

ia

rt is publishedry of OSK Inve

ry of RHB Capi

rt is publishedry of OSK Invery of RHB Capi

risdictions

her jurisdictionns of the jurisdi

Kual

Malaysia RRHB Researc

Level 11, TowJalan

KualM

Tel : +(6Fax : +(6

J

PT RHB OSK Srly known as PT

IndPlaza

14Jl. Jend. S

Jakarta SelataTel : +(62Fax : +(62

ents

fluctuate, somather than profidetermined sch

and distributedtment Bank Be

al Berhad.

and distributedtment Bank Beal Berhad.

, this report is iictions.

a Lumpur

esearch Officeh Institute Sdn Bh

r One, RHB CenTun Razaka Lumpurlaysia) 3 9280 2185) 3 9284 8693

akarta

ecurities IndoneOSK Nusadanaonesia)IMB Niagah Floor

udirman Kav.25n 12920, Indones21) 2598 688821) 2598 6777

times dramatict made as a resedule for publi

in Indonesia brhad, Malaysia,

in Thailand byrhad, Malaysia,

intended to be

d

re

(f

siaSecurities

ia

(

ally. The priceult of buying anation of resear

PT RHB OSKwhich have sin

RHB OSK Secwhich have sin

istributed to qu

RHB OSKormerly known

1

TeFa

RHB OSK (Chi(formerly kno

Suit116

TelFax

RHB OSKormerly known

10th Floor,98, N

Ba

F

f a security mad selling securih and will not

Securities Indoce merged into

rities (Thailance merged into

alified, accredi

Hong Kong

Securities Hongs OSK Securitie

12th Floororld-Wide Hous

9 Des Voeux Roentral, Hong Ko

l : +(852) 2525 1x : +(852) 2810 0

Shanghai

a) Investment Awn as OSK (Chidvisory Co. Ltd

e 4005, CITIC Sq8 Nanjing WestShanghai 20041

China: +(8621) 6288: +(8621) 6288

Bangkok

Securities (Thaas OSK SecuritiSathorn Squarerth Sathorn Roagrak, Bangkok 1

Thailandel: +(66) 862 99

ax : +(66) 108 09

y move up or dities. Past perfoecessarily upd

nesia (formerlyRHB Investme

) PCL (formerlRHB Investme

ed and profess

Kong Ltd.s Hong Kong Lt

edg

118908

dvisor y Co. Ltd.a) Investment

.)uareoad

611633

iland) PCLs (Thailand) PCffice Tower,Silom500

999

own, and mayrmance is notate this report

known as PTnt Bank Berha

known as OSnt Bank Berha

ional investors,

d.)

RHB(formerly kn

S

L)

ecome valueleguide to future

SK Nusadana, which in turn

Securities (Th, which in turn

in compliance

Singa

DMG & P

Securities

10 Collye#09-08 Ocean Fi

SingaporeTel : +(65) 6Fax : +(65) 6

Phnom

OSK Indochinaown as OSK Ind

No. 1-3, Stngkat Toeuk Thl

PhnomCamb

Tel: +(855) 2Fax: +(855) 2

ss. It is as likelperformance.

Securities Indois a wholly-own

ailand) PCL),is a wholly-own

ith the law an

ore

artnersPte. Ltd.

r Quaynancial Centre049315533 1818532 6211

Penh

Securities Limitochina Securitiereet 271, Khan Sen Sok

Penhdia

3 969 1613 969 171

7

thatHBSHK

nesia), aed

ed

eds Limited)