Citi flags supply outlook risks despite growth in Aussie Sept car sales

ARB

17/10/2022 06:42

** Citi says new car sales in Australia continued to grow in
September 2022, increasing by 12% despite facing tough
competitions
    ** Says supply challenges expected to continue over the
short-term due to semiconductor shortage and shipping delays
    ** Adds that demand for SUVs across Australia appears to be
"holding up" - a positive for vehicle accessories maker ARB Corp
 ARB.AX  and automotive parts maker GUD Holdings'  GUD.AX  unit
AutoPacific Group
     ** Citi retains "buy" on Australia's automotive parts and
accessories maker Bapcor  BAP.AX  on the back of its majorly
non-discretionary product offering, a strong balance sheet and
medium-term strategies
    ** Brokerage also gives "buy" rating to ARB Corp  ARB.AX  as
it sees co's strong balance sheet and profitable operations well
placed against the impacts from Original Equipment Manufacturer
(OEM) supply chain disruption
    ** However, Citi flags risks over rising interest rates as
it feels this can be an increasing headwind for new car demand
on the back of RBA's further cash rate hike by 25 bps
    ** Shares of Bapcor  BAP.AX  jumped 0.16% today
    ** Shares of GUD and ARB Corp down 4.8% and 1%, respectively
 (Reporting by Rishav Chatterjee in Bengaluru)
 ((Rishav.Chatterjee@thomsonreuters.com;))