After series of earning slumps, MBSB Research has upgraded Bermaz Auto Bhd (BAuto) to BUY from NEUTRAL and raised its target price to 99 sen from 85 sen, citing improving earnings prospects, encouraging Mazda CX-5 bookings and a broader XPeng model pipeline.
The research house said BAuto’s vehicle sales remain broadly on track to meet FY27 targets, while higher Mazda Malaysia and XPeng volumes, together with improving domestic operating margins, prompted it to lift FY27 and FY28 earnings forecasts by 15% and 8%, respectively.
MBSB’s revised target price is based on eight times FY27 forecast earnings, or one standard deviation below BAuto’s five-year average, reflecting continued competitive pressure in the non-national automotive segment.
It added that BAuto’s RM187.4 million net cash position as at end-1QFY27, alongside recovering earnings, should support an attractive dividend yield of more than 9%.
BAuto is maintaining its FY27 Mazda Malaysia sales target of 12,200 units, up 24.3% year-on-year. First-quarter sales of 3,024 units represented about 25% of the full-year target, while outstanding bookings stood at an estimated 1,200 units.
MBSB said demand for the all-new Mazda CX-5 2.5L, priced at RM169,000, has been encouraging, with around 800 bookings secured ahead of planned completely knocked-down production at Inokom’s Kulim plant next year.
The Mazda 3 1.5L remained a major contributor, accounting for about 60% of Mazda Malaysia’s sales in 1QFY27.
Separately, BAuto is targeting 2,000 XPeng units in FY27, up 33.2% year-on-year, with about 20% of the target achieved in the first quarter. Outstanding XPeng bookings stood at around 250 units.
MBSB said XPeng margins were pressured in 1QFY27 by promotional activities to clear remaining completely built-up inventories of the G6 and X9, both of which are now assembled locally at EPMB’s Melaka plant.
However, it expects margins to improve as the product line-up expands.
BAuto is expected to launch a new D-segment electric SUV by end-2026, widely speculated to be the XPeng G9L, followed by the L03 C-segment electric SUV under XPeng’s MONA sub-brand in April 2027.
MBSB said the stronger Mazda and XPeng sales outlook, improving operating leverage and BAuto’s healthy balance sheet support a more positive earnings trajectory.
