Tuesday, July 13, 2010

More interests in auto stocks?

There are quite a lot of news on consolidation of the auto industry which could generate some interests in auto stocks like Tan Chong, MBM Resources, APM, Delloyd, Proton, UMW, New Hoong Fatt, Ingress, TSM Global.

At a glance, MBM Resources, Delloyd, APM and TSM Global seem to be more attractive.
Will write more on these counters...

The news:
The Ministry of International Trade and Industry (MITI) will leave it to the local automative players to determine the model for the consolidation of their industry.

"The model is up to them. What is important is to ensure that steps are taken to increase productivity and efficiency as well as reduce production cost and increase competitivenes of the local automotive industry.

"That's the bottomline," said its minister, Datuk Seri Mustapa Mohamed after launching the Industry Led Automotive Graduate Apprenticeship Programme in Kuala Lumpur today. A Memorandum of Understanding between Malaysia Automotive Institute (MAI) and UiTM was also signed today.

Mustapa said the consolidation was urgent as there was excess capacity, keen competition and a need to increase export earnings.

"This is a timely suggestion. We have excess capacity and due to keen competition in the international market, we have to increase exports and not just depend on the small domestic market."

At the Proton's 25th Anniversary Gala Dinner last Friday, Prime Minister Datuk Seri Najib Tun Razak called on local automotive companies to consider merging if there was overcapacity in the industry.

Mustapa disclosed that the parties concerned have begun discussions.

He also said he had been briefed on the situation and what was important now was the implementation.

"It makes good sense. If the companies cooperate, there are many things that can be shared and this can be cost saving," he added.

On the pace of consolidation, he said companies should talk to each other and that the government strongly encouraged it.

Meanwhile, in his speech at the launching of the apprenticeship programme, he said many industrialists believed that the issue of unemployment arose due to a mismatch between market requirements and the graduates produced by the local institutes of higher learning.

Many graduates are not ready for employment as they do not possess the necessary skills to immediately perform their work.

"The apprenticeship programme initiated by MAI and UiTM for 60 mechanical engineering students is a timely intiative," he added.

Under the course, students will spend only three days in a week in the classroom acquiring theoritical knowledge, while the balance two days will be spent in acquiring industry related knowledge.

Mustapa also suggested that the programme model be used in other sectors.

Source: Business Times

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