Markets were rattled after President Trump unveiled sweeping import tariffs far exceeding expectations. Equity futures and the U.S. dollar fell sharply as investors brace for potential volatility and a breakdown in global trade order. What Happened On "Liberation Day," President Trump announced: A universal 10% tariff on all imports to the U.S. Reciprocal tariffs on key trading partners: China: 34% Vietnam: 46% European Union: 20% Taiwan: 32% An additional 25% tariff on automobile imports , effective after midnight. “Trump is blowing up the postwar system that made the U.S. and the world more prosperous.” — Nigel Green, CEO, deVere Group Market Reaction Initial market optimism turned quickly as the full scale of tariffs became clear. Equity Futures: S&P 500 E-mini Futures : -3.4% Nasdaq 100 Futures : -4.2% Dow Futures : -2.2% (down 892 points) Currency Markets: Dollar Index (DXY) : -0.5% to 103.74 after early gains Flat against CAD and...
Maintain Buy with unchanged Target Price of RM2.40
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| Berjaya Auto Bhd |
We maintain our BUY call for Berjaya Auto due to its:
1. Attractive product pipeline going forward;
2. Aggressive expansion from its Philippines operations, helped by a booming auto market (projected growth of 15% in 2016); and,
3. Strong ability to capture market share (2.4% YTD from 1.5%).
Continuously filling its product pipeline.
We expect Berjaya Auto (BAuto) to maintain an interesting product launch schedule in 2016, mainly from its facelifted models and diesel variants. The face-lift completely knocked down (CKD) CX-5 was recently launched in February, while the CKD CX-3 is anticipated to hit the market by end-2016. As for its “diesel wave”, we believe Mazda 6 would be introduced by mid-year. The diesel CKD CX-5 is also likely to be offered, as the model is already being assembled in Malaysia for the Thailand market.
Strong growth from the Philippines.
The Philippines operations recorded a quarterly sales growth of 41.8% YoY, driven largely by the Mazda 2 and Mazda 3, which saw an increase of volume by 69.3% and 36.4% YoY respectively. The Philippines market would become increasingly significant for BAuto, with industry sales expected to grow 15% to 350,000 units.
Forecasts and risks.
We revised our earnings forecasts for FY16-18 down by 9.4%, 3.7% and 5.0% respectively. Downside risks for our recommendation and TP include: i) unfavourable forex movements, ii) disruption in product pipeline, and iii) lacklustre consumer spending.
Source: RHB Research
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