Bermaz Auto’s sales momentum to continue – Business News

KUALA LUMPUR: Bermaz Auto Bhd is expected to continue seeing robust sales momentum in F19-21E on continued demand for new car model launches, said Affin Hwang Capital research.

The research house said the expected launch of the all-new Mazda 3, all-new M6 and all-new CX-8 should push sales forward in FY20-21E.

Meanwhile, the popular demand for existing model line-ups coupled with 3,000 backlog of orders should sustain 2HFY19 sales volume. 

“We continue to like Bauto for its solid earnings outlook, high ROE business model, superior profit margins vs peers, decent dividend yield of 6% and undemanding valuation of 10x FY19E PER,” said Affin Hwang.

The research house said price-earnings for Bermaz Auto has suffered an unwarranted derating, perhaps due to investors remaining cautious on vehicle affordability affecting Malaysian auto sales, earning momentum rising on the Mazda flagship CX-5 and intense competition from other automakers.

However, Mazda’s 11M18 sales market share continued to expand to 2.6% (vs. 11M17 of 1.7%), providing comfort on Bermaz’s earnings trajectory moving forward. 

Affin Hwang said EBITDA margins should remain healthy due to higher CKD participation and the ringgit strengthening over the long term. However, EBITDA margin may soften in 2HFY19 from temporary weakness in the ringgit versus the yen.

“To protect its margins, we think Bauto may hike prices of Mazda cars in CY19,” it said.


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