Bermaz Auto Berhad (BAuto) is standing strong and resilient, and also on track to achieve its FY24E target of 24k vehicle sales, 12% increase year-on-year (YoY) driven by sustaining strong bookings.
In its research note today (Nov 7), Maybank Investment Bank Bhd (Maybank IB) has sold estimated of more than 1500 units per month versus around its historical average of around 1,200 units, improved supply chain, and upcoming launches.
Therefore, the research house maintains its earnings forecasts, BUY rating, and TP of RM4.14 (12.5 times FY24E PER; 5Y 12M fwd. mean) for BAuto.
“Currently, it has a backlog order of a total of 3,000 units for Mazda. According to MAA, Mazda recorded 8,300 unit sales in 5MFY24 (as of September). If this sales momentum continues, BAuto may even exceed its FY24E sales target of 18,000 units for Mazda Malaysia,” it said, adding 5MFY24 sales remain robust post-SST holiday.
Maybank IB said BAuto also has new products in the pipeline including facelifted Mazda 3 with a MYR7,000 price increase in October following the recent MYR5,000 hike in September.
“However, bookings remain strong, averaging more than 150 units per month. We anticipate an upcoming CX-3 facelift, launched overseas months ago.
“Meanwhile, the Mazda CX-60 is expected to launch in 1HCY24, and BAuto is also negotiating new CKD-Kia Sportage and CKD-Peugeot 408 models, expected to act as catalysts to drive future sales growth,” it said.
The research house said BAuto has minimal USD exposure, and based on its estimates, a 5% fluctuation in USD will have less than 1% impact on its profits.
“We continue to like BAuto for its solid fundamental and resilient financials, with a net cash position and strong FCFs (minimum capex requirements on asset light business model).
“Growth is underpinned by its robust pipeline of new launches and increasing CKD mix, providing good earnings visibility. Even with our conservative assumption of 75% DPR versus historical DPR of 78% to 114%), BAuto already offer an attractive div. yield of more than 10%,” it added.
Risks to Maybank IB’s call include soft consumer sentiment and unattractive model launches may drag earnings and forex volatility beyond hedges.
