Analysts believe new China car models from XPeng and Deepal could uplift Bermaz Auto sales in 2025, this comes as its core net profit plunged 42% year-on-year (YoY) in the first half of financial year 2024/25, according to Kenanga Investment Bank Bhd (Kenanga Research).
Kenanga Research has maintained the OUTPERFORM rating for Bermaz Auto citing an attractive dividend yield of 9%. However, the target price has been lowered to RM2.20 as derived by the PE-based model. The RM2.20 target price still rewards a premium of 26 sen over the current market pricing.
Notably, auto dealer’s core net profit plunged by a steeper 42% due to lower margins from its Kia operations, unfavourable sales mix, and lower contribution from its associates, represented largely by contract vehicle assembler Mazda Malaysia Sdn Bhd and Inokom Corporation Sdn Bhd which recorded weaker profit on a lower production level.
Analysts have also adjusted their 2025 net profit forecast by 19% and 2026 forecast by 8% given lower sales volume. Nevertheless, well-anticipated new launches in 2025 are competitive and are expected to uplift earnings.
In terms of revenue, Bermaz Auto’s first half-yearly revenue plunged 29% dragged by weak demand for Mazda and Kia. Sales of Mazda vehicles declined 30% while Kia sales declined 55%. Bermaz Auto also faced intense competition from the influx of Chinese-made vehicles with low entry-level price points, partially offset by maiden sales of Bermaz Auto’s own Chinese-made Xpeng vehicles.
In terms of geographical breakdown, lower sales volume was recorded in Malaysia (-31%) and in the Philippines (-24%), also attributable to heightened competition.
