We maintain our BUY rating and earnings forecasts for Berm Auto (BAUTO) but lower our fair value to RM3.34/share (from RM3.42) on a rolled forward base FY25F valuation pegged an unchanged 12x P/E, at parity to its historical 5-year averag No change to our neutral 3-star ESG rating.
BAUTO delivered with 3QFY24 net profit of RM70.5mil (-19 YoY, -22% QoQ). This brings 9MFY24 net profit to RM260.8m (+28% YoY) and makes up 78% of our FY24F net profit. W deem this result as in line with our and market consensus.
Announced a DPS of 4.25sen (-15% YoY) which represents payout ratio of 70%. This goes ex-div on 18 April. The 9MFY2 DPS tallies to 14.
3QFY24 net profit was weaker YoY and QoQ due to a low number of cars sold and change in sales mix in Malaysi Furthermore, last year was exceptionally strong due to pen up demand stemming from a prolonged period of supp disruptions for the general automotive sector.
The Philippines operations delivered a strong showing wi revenue and net profit almost doubling YoY on the back of 73 growth in cars sold.
BAUTO’s annualised inventory turnover was at 6.9x in 3QFY2 consistent with its historical average of 7.0x. This sugges that consumer demand is stable.
Balance sheet remains solid with a net cash of RM304mil. Th company delivered FCF of RM267mill in 3QFY24, whic equates to 30% of revenue, making it the sector leader.
The outlook statement is mixed with management bein optimistic about its new product lineup which enjoyed goo reception and initial take-up rates. However, it is cautiou about the high-interest rate environment and volatile glob markets.
Our positive outlook on BAUTO is due to its:
➢ Impressive new model pipeline,
➢ Strong brand franchise with a highly loyal clientele,
➢ Strong balance sheet with industry-leading ROEs, and
➢ FY24F FCF yield of 8.7%, enabling management to pa higher than its stipulated 60% dividend payout policy.
The stock currently trades at 7.5x FY24 P/E, which is at a 37 discount to its 5-year historical average of 12x.
New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
MQ Trader 2909 views | 2 d ago
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New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
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