UMW confident of 2H11 sales despite amendments to HPA
Posted on July 20, 2011, Wednesday
OPTIMISTIC OUTLOOK: Despite the slowdown in car sales during 1H11 due to the recent HPA amendments, improvement in sales should be visible in 2H11 as there is still an ongoing demand for cars.
KUCHING: Despite the slowdown in sales due to the lengthy processes following the amendments on the Hire-Purchase Act 1967 (HPA), UMW Holdings (UMW) is confident that sales would improve in the second half of 2011 (2H11).
To recap, following the implementation of the amended HPA policy on June 15, both the Toyota and Perodua had registered a lower than expected sales in 1H11. During this period, Toyota recorded sales of only 42,000 units, a decrease of six per cent year-on-year (y-o-y). Perodua on the other hand only managed to sell 79,000 units, a record set that was 16 per cent lower y-o-y. In addition to that, the decline in sales was also largely attributed to the he auto parts supply shortage from Japan.
Nevertheless, chief executive officer of UMW Datuk Syed Hisham bin Syed Wazir affirmed his confidence in the next second half as possible facelift models from both Toyota and Perodua would appeal to the market, thus boosting sales in 2H11.
“Response to theMyvi model has been encouraging with 19,000 units booked since its launch in mid-Jun,” said the research report.
According to the analyst at the research house, UMW would not have difficulties in achieving its targeted units of 95,000 units for Toyota and 195,000 units for Perodua for the year 2011.
“Although the HPA does impede the sales of cars in the first half of 2011, however, I am optimistic that UMW will reach its target for the year as demand is there. Going forward, the HPA should not deter the sales of cars too much on the part of UMW,” opined the analyst.
Apart from that, Datuk Syed Hisham expected sales to significantly improve in August backed by the Eid Mubarak festive demand.
When asked to comment on the forecast for UMW following the local assembly for the Toyota Camry,the analyst indicated that in the initial years there would not be any significant impact on the performance of the group. However, marginal improvements should be visible after that.
Moving ahead, the key focus for the group this year would be to turn around its Oil and Gas division which recorded a pretax loss of RM191 million in the financial year 2010.
“We estimate the FY11 pretax profit of RM33.5 million to be underpinned by the full commissioning of all three jack-up rigs, improving margins at WSP Holdings, and full year contribution from its India venture USTPL,” said the analyst.
On a separate note, apart from growing the group’s OCTG and Line Pipes as well as its exploration businesses, Datuk Syed Hisham aimed to explore the oilfield services while riding on the Petronas’ expansion of marginal oilfields.
HwangDBS Research pegged UMW at a target price of RM8.55 as the research house rolled over its valuation window to the financial year 2012 forecast.
