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Author: PublicInvest   |   Latest post: Fri, 19 Jul 2019, 8:51 AM

 

Bermaz Auto Berhad - Normalised Domestic Sales Volume.pdf

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Bermaz Auto (BAuto) recorded a 4QFY19 net profit of RM60.1m (+5% YoY), bringing its full year FY19 net profit to RM265.3m (+89% YoY). It was above ours and consensus’ expectations, accounting for 126% and 108% of full year estimates. The discrepancy was mainly due to better-than-expected contribution from its associate of Mazda Malaysia (MMSB) owing to increase in production volume for the CX-5 model (+68% YoY) for both the domestic and export markets. Domestic sales volume has normalised during the quarter as it fulfilled all back orders received during the tax holiday period. We adjust upward our earnings forecast by c.10% for FY20-21F to account for higher share of associates’ profit as we expect stronger contribution from MMSB to sustain from the export growth in both CKD of CX-5 and CX-8 models. As a result, our Outperform call for BAuto is retained but at a higher target price of RM2.80 (previously RM2.57), pegged to 13x FY20 EPS. BAuto declared a fourth interim dividend of 3.50 sen and a special dividend of 7 sen, bringing its full year dividend per share to 21.25 sen (FY18: 10.40 sen).

  • Revenue for 4Q19 declined 6% YoY to RM538.3m on the back of lower vehicle sales volume from both the domestic (-7%) and the Philippine operations (-36%). During the quarter, the sales volume in Malaysia has normalised as the Group has fulfilled all back orders received during the tax holiday prior to 1 September 2018. Meanwhile, excise duty hikes in Philippines continues dampening the demand for motor vehicle. For full year FY19, revenue jumped by 25% YoY to RM2.5bn compared to RM2bn in FY18 due to boosted demand in Domestic market owing to tax holiday period.
  • Net profit. BAuto reported higher net profit in 4Q19 however at RM60m (+5% YoY) due to lower operating overheads. It also reported lower share of associates’ profit contribution (-40% YoY), largely from Mazda Malaysia (MMSB) due to lower production volume for the CX-5 model (-17%) as sales is anticipated to normalise over the next few months. Full year FY19 earnings has almost doubled (+91%) to RM265.3m, despite lower contribution from its Philippine operation, with EBIT margin declined to 3.2% due to weaker sales demand in the country.
  • Dividend. During the quarter, BAuto declared a fourth interim dividend of 3.50 sen and a special dividend of 7 sen (4QFY18: 2.30 sen and 2.70 sen respectively), bringing its FY19 dividend per share to 21.25 sen (FY18: 10.40 sen), the highest yearly dividend per share declared to date. This translates to a payout ratio of 93%, compared to last year’s payout of 86%.
  • Outlook. Sales for Domestic market is expected to be driven by new launches of Mazda3 (1QFY20), CX-8 (2QFY20), CX30 (2QFY20) and new facelift of CX- 5 Turbo (2HCY20). However, this could be partially offset by slower demand for the Philippine operations.

Source: PublicInvest Research - 13 Jun 2019

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