Bermaz Auto announced that it was awarded distributorship & rights for sale of spare parts and provision of after sales services of China brand XPeng smart EVs in Malaysia. XPeng is a Guangzhou-based EV start-up listed on the NYSE and HKSE. MIDF notes that although its market share is currently small, the group counts the VW Group as a strategic investor and under the partnership, is looking to launch two EV models by 2026 and will collaborate on platform and software development, among others.
What are BAuto’s plans? Details of this new venture are still sketchy, but the house said it understands that BAuto is eyeing a majority stake in the distribution business. MIDF said it also gathers that ‘minimal’ capex is expected at the initial
stages as local distributor is looking at CBU imports for the initial seeding and market testing phase, capitalising on the excise duty exemption for CBU BEVs which runs until December 2025. One firm model is in the pipeline i.e., the G6 midsize SUV, whereby the G6 will also be XPeng’s first RHD model, scheduled for launch in 2HCY24. Based on pricing in China of
between RMB210K-277K, the house reckons the G6 might be positioned around the RM150K-RM200K price point for the Malaysian market, which will pit it against the BYD Atto and Tesla Model-Y. There is no firm indication on CKD plans yet but MIDF believes this is a possibility given that CKD BEVs are extended excise duty exemption further out until December 2027.
MIDF thinks BAuto is eyeing ASEAN as part of global expansion which is part of XPeng’s global expansion strategy, which
counts ASEAN and EMEA as some of the key regions it is eyeing. For ASEAN, the group has made public of its plans to enter
the Singapore, Thailand and Malaysian market via partnership with local distributors. The house believes BAuto might consider negotiating for distribution rights for the Philippines market where it has a ready distribution network for the
Mazda brand.
While still early days, MIDF believes the addition of XPeng fills an important gap in group’s electrification plan considering China auto industry’s dominance and technical competence in the BEV space. BAuto is currently heavily reliant on Japanese marques and more recently a Korean marque, to drive sales. ICE is expected to remain the group’s mainstay for now in line with still meagre BEV penetration in Malaysia which stood at 1.3% in CY23.
However, the Malaysian Government has set a target of hitting 15%/38% xEV penetration by 2030/40; the transition to BEV
is expected to pick up pace once BEV cost moves closer to parity with ICE and regulated price floors are eventually removed
in the market – this partnership positions BAuto well to capture such growth opportunities in the transition.
Earnings estimates. We leave our projections unchanged at this juncture pending further detailed plans on the rollout of
the XPeng distribution business.
MIDF maintains a BUY call on BAuto at unchanged TP of RM3.39. Valuation is cheap at 8.4x FY24F PER while dividend yield is attractive at 9.5% (80% DPR). Key catalysts: (1) Rollout of the Kia Sportage, (2) Weak JPY, (3) BEV duty exemptions which may incentivize consumer take-up of EV models – BAuto is well positioned to capitalize on this with ready EV models from Kia (EV6 & Niro EV), Mazda (MX30 EV) and the upcoming XPeng EV models.
