Bermaz Auto Bhd (BAuto) announced that Stellantis N.V. (Stellantis) is revamping its Peugeot operations in Malaysia by directly managing the sales and distribution of its vehicles. Stellantis will form its own national sales company (NSC) in 1Q24 while BAuto will be scaled down to super dealer from exclusive distributor for Peugeot margue in Malaysia. We are neutral on this development as it is not expected to have any material financial and operational impact on BAuto. All said, we retain our Neutral rating on Bermaz with unchanged target price of RM2.42.

• Stellantis is the owner of several internationally renowned vehicle marques such as Peugeot, intends to establish its own NSC in Malaysia to directly manage the sale and distribution of its vehicles as well as the introduction of its other marques in Malaysia and Asean region. This is part of Stellantis’ new direction and strategy for the Asean region which includes its electrification ambitions.

• Financial Impact. To recap, BAuto’s 55% subsidiary, Bermaz Auto Alliance SB (BAA) was awarded exclusive distributorship of Peugeot models in Malaysia by Groupe PSA (now known as Stellantis) back in Dec 2020. In view of Stellantis’ new business strategy for Asean region, BAA will return the distribution function to Stellantis following the non-renewal of distribution agreement expiring 30 Nov 2023. BAuto’s capital outlay and the contribution from the Peugeot marque distributorship is minimal. It is not expected to have any material financial and operational impact on BAuto.

Source: PublicInvest Research - 23 Nov 2023