Bermaz Auto (BAuto) reported a net profit of RM40.7m in 3QFY22 (YoY: +23.1%, QoQ: +56.3%). Cumulative 9MFY22 results were below our and consensus expectations, accounting for 64.2% and 58.1% of our and consensus full-year estimates respectively. The discrepancy was mainly due to the impact of supply chain constraint which affected car sales volume. We maintain our earnings forecasts for now as we expect car sales to pick up in the coming quarter due to the arrival of CBU shipments and stronger delivery of CKD units. However, we believe demand is likely to taper off once sales tax exemption ends and as such, we keep our Neutral call. On a side note, BAuto declared a third interim of 2.25sen per share, bringing total dividend declared for 9MFY22 to 4.25sen, translating to a payout ratio of 64.3% (FY20: 3.3sen at 56.3% payout ratio).
- Change in sales mix. Revenue for 3QFY22 increased to RM623.1m (YoY: +4.2%, QoQ: +28.8%) mainly due improved sales volume from the Group’s overall operations. QoQ, sales volume increased by 29.5% to 3,945 units. Kia and Peugeot operations have also contributed positively to the Group’s revenue particularly Kia Carnival, which was launched in Jan 2022, was well received by the market.
- Net Profit for 3QFY22 improved by 23.1% YoY to RM40.7m in line with the increase in revenue. The higher profit also boosted by its associated company Mazda Malaysia due to improvement in CKD unit sales. In addition, 3QFY21 was negatively affected by higher cost incurred from promotional campaigns such as “6-year free warranty and free maintenance” to clear the inventory post MCO 1.0.
- Outlook. Malaysia’s Total Industry Volume (TIV) has fallen for two consecutive years, reported 508,911 units in 2011, fell 4% compared to 2020 but an improvement compared to a drop of 12% in 2020. Sales and production have been affected by closure of showrooms and production facility during periods of lockdown. Nevertheless, TIV rebounded since restriction eased in Aug 2021. Malaysia Automotive Association (MAA) forecasted TIV of 600,000 units for 2022. While demand remains supported by the extended sales tax holiday until 30 June this year, sales may be capped by production cut due to chips and parts shortages because of supply chain disruptions and the development in Ukraine. We expect TIV in 2022 to improve compared to 2021 but remain below pre pandemic levels.
Source: PublicInvest Research - 11 Mar 2022