KUALA LUMPUR: Bermaz Auto Bhd’s (BAuto) earnings could be back-end loaded, driven by the introduction of new models and facelifts from the Mazda, Peugeot and Kia marques, as Malaysia expedited its National Recovery Plan.
Affin Hwang Capital expects BAuto’s core earnings’ compounded annual growth rate (CAGR) to grow steadily at 9.4 per cent for the financial year ending April 30, 2022 (FY22) until 2024.
Its analyst Damia Othman said this would be supported by the resumption of economic activities in Malaysia and the Philippines, extension of the sales tax exemption until June 30, 2022, full-tax exemption on electric vehicles in 2022, and introduction of new models and facelifts from the wide array of marques.
However, she cautioned that Mazda’s completely built-up (CBU) models might be affected by the low supply of microchips.
“Hence sales contribution is expected to be driven by the Mazda complete-knocked down (CKD) models like the CX-5 and CX-8 as well as growing demand for Kia and Peugeot marquees,” she said in research report today.
Damia said BAuto’s Mazda Malaysia Sdn Bhd (MMSB) assembly plant was likely to produce up to 1,500 vehicles per month and expected the group to deliver 11,300 vehicles in FY22.
“As of six month of in FY22, BAuto’s total sales in Malaysia reached 4,500 units.”
She said the group’s CKD unit sales accounted for 70 per cent of the total Malaysia unit sales currently.
Meanwhile, the group’s production could gradually growing in the coming quarters but with lower sales of CBU units from the Malaysia and the Philippine businesses due to the low supply of microchips globally.
Affin Hwang has reiterated a “Buy” recommendation with a target price for BAuto at RM1.92 from RM1.70) with valuation being pegged to 15 times price-earnings-to ratio with implied dividend yields between 3.3 per cent and 5.0 per cent.
Key downside risks include chip supply constraints, a weaker ringgit increasing import costs, and a decline in consumer sentiment due to increase in Covid-19 cases from the new variant.
Source: New Straits Times
