PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 24 Apr 2019, 9:46 AM


Bermaz Auto Berhad - Strong Performance Continues

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Bermaz Auto (BAuto) recorded a robust net profit of RM81.0m in 3QFY19 (+100.2% YoY), driven by a healthy jump in sales volume and strong contributions from its associates. Cumulative 9MFY19 net profit of RM205.2m is ahead of expectations at 96% and 92% of our and consensus full year estimates respectively. We are leaving our estimates unchanged at this juncture however in anticipation of the final quarter being a seasonally weaker one, though we see final full-year numbers eventually exceeding forecasts. Our Outperform call on BAuto is maintained with target price of RM2.57 based on 13x FY20F EPS.

  • Malaysian operations drive revenue growth (+12.7% QoQ, +39.1% YoY). Revenue for 3QFY19 is higher 39.1% YoY to RM778.1m (2QFY18: RM559.4m), a large part due to improved sales volumes domestically (+74.6% YoY), in particular the CX5 variant which recorded a doubling in units sold. Cumulative 9MFY19 revenue is 71.8% higher YoY to RM1.70bn on a 61.3% YoY increase in Malaysian unit sales. Excise duty hikes in Philippines dragged contributions from the country, with cumulative 9MFY19 revenue down 41.7% YoY to RM251.7mn on a 40.0% reduction in unit sales.
  • Stronger sales and better associates’ contribution drive earnings. 3QFY19 net profit of RM81.0m is miles ahead of the RM40.5m recorded in 3QFY18 on account of stronger sales and improved pretax margins in the domestic market (3QFY19: 11.8% vs 3QFY18: 9.6%), aided by a favorable sales mix and stronger Ringgit against the Yen. Domestic sales volume for its completely knocked-down (CKD) units was 76.3% higher YoY and 27.6% higher QoQ, the latter a strong measure of its improved reach. 30%-owned Mazda Malaysia also contributed a higher RM36.4m (+>100%) to the Group, this coming on the back of increased production volume for both the domestic and export markets. The Group’s Philippines unit saw ongoing margin pressures due to lower sales volume however (Table 2).
  • Dividend. A third interim dividend of 4.5 sen per share (2QFY19: 3.75 sen/share) was declared, and is payable on 25th April 2019. Cumulative 9MFY19 dividend per share of 11.75sen translates to a 61% payout ratio.
  • Going forward.. The Mazda brand continues to make significant headway in the domestic market, now commanding a 7.5% market share (as at 2018) in the non-national segment versus the 5.9% the year before, with an almost-doubling of units sold. 9MFY19 Malaysian unit sales in itself is 61.3% higher YoY against the previous corresponding period, though Philippines has been a 39.9% YoY slump. Sales will be driven by a slew of new launches planned: Mazda3 SkyActivX (1QFY20), Mazda CX30 (2QFY20) and Mazda CX8 (2QFY20).

Source: PublicInvest Research - 14 Mar 2019

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