To assemble Camry and higher 91k unit sales
UMW plans to produce Toyota Camrys at its Shah Alam plant
in 2 years, with a budget of RM100m. We see negligible
impact on the selling price from this development versus
importing from Thailand because of the minimal tax imposed
under a free trade agreement between Malaysia and Thailand.
In support of Malaysia’s National Automotive Policy (NAP)
however, producing Camrys here opens the opportunity for
UMW to use more local content.
With regards to 2010 sales, UMW now targets 91k units,
which is slightly higher than an earlier forecast of 88k. This is
driven by good response to its new Vios variant. Assuming this
new sales target would have minimal 2% upside to our
forecast net profits and sum-of-parts price target. As such, we
are keeping our Hold call on UMW with a sum-of-parts price
target of RM6.30. We see no near term catalyst for the time
being, but are concern about the risk of further delays in UMW
signing leases for its Naga 2 and Naga 3 rigs (within its O&G
division).
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