Affin Hwang maintained a "buy" call on UMW Holdings with RM4.10 target price.
"We believe valuation is attractive, in view of the new volume-generative Toyota model line-ups, modest growth from its two core segments (automotive and manufacturing), and higher Perodua associate contribution," he added.
MIDF Research analyst Hafriz Hezry said the mechanical and electrical division was a bright spot and a growth area for UMW Holdings.
"UMW aerospace in particular, saw earnings turnaround a year earlier, given higher volumes for fan cases and cost optimisation (improved learning curve and employee capability, efficient utility cost management, reduction in expatriate staff and efficiency in material sourcing)," he said.
He said the group's cost optimisation exercise this year with a two-pronged involving a variable component (efforts on component cost, logistics cost and productivity improvement) and a fixed cost component) would tackle non-strategic spending such as promotional expenses and operating expenditure.
"Cost optimisation effort is expected to contribute to "a few hundred million" in savings for the group," he added.
MIDF Research maintained a "buy" call for UMW Holdings with a target price of RM3.40.
This was due to a turnaround in group earnings mainly driven by the automotive division and commencement of Trent 7000 engine assembly in the fourth-quarter this year.
The risks to the firm's call include a second wave of the Covid-19 pandemic and a weaker than expected demand recovery.
UMW is one of the few blue chip stocks still can rise up to get 75% to 100% share price appreciation, on top of usual dividends. During financial crisis, people will opt for cheaper cars ie perodua and Toyota :)
Changes in Sub. S-hldr's Int (Section 138 of CA 2016)
UMW HOLDINGS BERHAD
Particulars of substantial Securities Holder
Name EMPLOYEES PROVIDENT FUND BOARD Address Tingkat 19, Bangunan KWSP Jalan Raja Laut Kuala Lumpur 50350 Wilayah Persekutuan Malaysia. Company No. EPF ACT 1991 Nationality/Country of incorporation Malaysia Descriptions (Class) Ordinary Shares Details of changes
No Date of change No of securities Type of Transaction Nature of Interest 1 15 Jun 2020 500,000 Acquired Direct Interest Name of registered holder Citigroup Nominees (Tempatan) Sdn Bhd Address of registered holder Level 42, Menara Citibank 165, Jalan Ampang 50450 Kuala Lumpur Description of "Others" Type of Transaction
Circumstances by reason of which change has occurred Acquisition of shares. Nature of interest Direct Interest Direct (units) 145,926,468 Direct (%) 12.491 Indirect/deemed interest (units) Indirect/deemed interest (%) Total no of securities after change 145,926,468 Date of notice 16 Jun 2020 Date notice received by Listed Issuer 18 Jun 2020
In the latest review period of June 2020, Bursa Malaysia said there were six new additions and two deletions from the index constituents, bringing the total number of constituents to 73, an increase of 204% since its launch in 2014. The inclusions are: BERMAZ AUTO BHD, Duopharma Biotech Bhd, INARI AMERTRON BHD, Karex Bhd, RCE Capital Bhdand the Star Media Group. Those deleted from the list were Parkson Holdings Bhdand UMW HOLDINGS BHD
UMW Toyota Motor Sdn Bhd (UMWT) is the sole distributor of Toyota and Lexus models in Malaysia and also the single largest shareholder of Perusahaan Otomobil Kedua Sdn Bhd (Perodua), Malaysia’s top homegrown carmaker.
Market leader Perodua has announced that it has sold an estimated 21,250 cars in June, which is its highest monthly sales figure this year. The numbers are nearly triple that of that achieved in May, when the automaker sold 7,886 units following the resumption of its business on May 19.
The company said that the sales tax exemption announced by the government on June 5 to boost car sales following the Covid-19 outbreak has had a positive impact on sales. The move sees locally-assembled (CKD) models enjoying a 100% sales tax exemption, while fully-imported (CBU) models get a 50% SST reduction until December 31, 2020.
1) Toyota is one of the best selling cars, UMW doesn't need to do the marketing, just look at Toyota Japan, even during Covid, do you see the price dropping? No, it is steady, toyota is a very steady brand.
2) Perodua, the best selling cars and UMW is the biggest shareholder. We all agreed during this economic uncertain times, the only car that we won't doubt that would still be selling is perodua, it is now and always will be the cheapest and affordable car for Malaysian.
3) Check out the transaction by the big boys, there's more buying than there is selling. They all know this is a bluechip and there's nothing to worry about it in long term.
4) My father in law works as a service advisor in Toyota service center. These past few years as Toyota sales were dropping, their staff hasn't gotten a bonus, management changed, the new management is very strict and pushed the staffs. This might be bad for the workers, but for investors we're seeing transformation under pressure, at the end of this UMW will be back to its former glory and keep making more profit.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
nickthebest
636 posts
Posted by nickthebest > 2020-06-16 11:59 | Report Abuse
This one can buy a bit and keep la