Malaysian civil servants are apparently set to receive a salary hike soon and, in light of which, analysts at AmInvestment Bank reportedly says that this will boost local auto sales for this year. The firm even notes that both national carmakers Proton and Perodua will benefit the most from which.
In fact, AmInvestment Bank predicts that no less than 1.5 million civil servants will be granted with higher consumer purchasing power and become more bankable. The firm adds that the auto industry is set to benefit highly from this, and it even revised its Total Industry Volume (TIV) predictions for 2024 to 750,000 – up from 740,000 previously.
“we believe Perodua and Proton will enjoy greater demand as these are the most popular brands amongst civil servants,” adds the analysts further in a recently issued sector report. However, AmInvestment Bank continued further by also noting that other brands are unlikely to see any meaningful improvements.
The impending increment in wages for Malaysian civil servants comes from a prior teaser issued by Communications Minister Fahmi Fadzil. In said teaser, Fahmi had alluded that civil servant salaries with be raised by 15% to 43% by end of this year. Details for which are set to be released in full later this week on Aug 16.
Furthermore, AmInvestment Bank notes that both MBM Resources and Sime Darby, as well as DRB HICOM, are all set to be key beneficiaries of this. Whilst the former two owns 20% and 38% stakes in second national carmaker Perodua respectively, the latter firm has a 50% controlling stake in first national carmaker Proton.
AmInvestment Bank analysts have also raised earning forecasts for MBM Resources for the 2024, 2025 and 2026 financial year (FY) spans by 3%, 5.2% and 3.7% respectively based on its expectations that the civil servants’ wages review will entail to boosted car sales.
It also emphasised that said scenario boosting sales in the affordable cars segment too – namely through offerings like the Proton Saga and Perodua Bezza. Beyond which, the firm maintains a “neutral” call on the sector, albeit with an upward bias.
Source: Bernama
