Auto Sector

First cars transferred and exported, boosting production in February by 36% YoY Neutral

Auto sector

- Auto production in February stands at 229,204 units,growing 36.35% YoY

The Thai Automotive Industry Association has reported the auto production

volume in February 2013 at 229,204 units, increasing by 36.35% YoY but

decreasing by 2.9% MoM as a result of fewer working days. For the domestic

auto market, the total auto sales stand at 129,910 units or 42.3% YoY

increase. Meanwhile, the export market has reached 94,527 units or 22.26%

YoY increase.

- Average auto production projected at 200,000

units/month, totaling 2.5-2.6 millions in 2013

According to the positive factor which is back orders from 2012, the auto

production volume during January - February 2013 has been boosted

continuously by 50.7% YoY to hit 465,000 units. We project that the auto

production would be 200,000 units/month at least from now on because

there's still auto production and transfer of back orders from the first car

policy which expired last year. Combined with car producers' strategies via

new car model introduction and sales promotion to sustain the level of

domestic sales together with more production for export, the auto production

in 2013 would grow by 5% YoY and hit the record high with 2.5-2.6 million

units.

- "Neutral"… STANLY chosen as top pick

The positive signal of 2013 auto production would help urge the operation of

6 auto part companies under our coverage to grow on the same path.

Preliminary, 1Q13 profit of every mentioned company is projected to enlarge

continuously from 4Q12 (with B1bn of profit) due to car producers'

acceleration on auto production to clear the remaining stock. The auto

sector's FY2013 profit from operation is projected at B4.58bn or 27% YoY

growth. Nevertheless, outstanding earnings in 1H13 tend to weaken in 2H13

and investment has cooled down after expiration of the government's first car

policy, so we recommend only "Neutral" for the auto sector. We choose