KUALA LUMPUR, Jan 16 — Automotive players with US dollar-denominated imports are expected to benefit from a stronger ringgit as a weaker greenback effectively reduces import costs, said MIDF Research.
In a research note today, the house said UMW Holdings Bhd (UMW) and Tan Chong Motor Holdings Bhd (TCM) are the two largest beneficiaries following their exposure to US dollar-denominated import of completely knocked down (CKD) kits and completely built-up (CBU) units.
“Every one per cent change in the US dollar/ ringgit pair is estimated to impact UMW’s financial year 2023 (FY2023) earnings by 3.7 per cent and TCM’s by 17 per cent.
“TCM’s bottom line is more sensitive as its FY2023 net profit forecast is close to breakeven levels,” MIDF said.
The US Federal Reserve’s (Fed) expected downshift to a 25 basis points interest rate hike has continued to boost the ringgit to hover at RM4.33 this morning.
In contrast, Bermaz Auto Bhd’s exposure to Japanese yen-denominated imports may see every one per cent change in the currency pair to impact its FY2023 forecast earnings by 0.9 per cent, mainly via Mazda CBU units, MIDF said.
Its finished CKDs are bought from 30 per cent owned Maza Malaysia Sdn Bhd in ringgit, and carries little forex risk.
The yen rebounded gradually to RM3.38 after a very weak performance last year.
— Bernama
