Bermaz Auto (BAuto) 1Q24 PATAMI of RM100mn (QoQ: -0.4%, YoY: 99.9%) came in strong at 32.8% of our forecast. This was not unexpected given the company’s fulfilment of backlog orders that were received during SST exemption. Revenue and profit rose by 51.6% YoY and 99.9% YoY thanks to the strong sales from its Mazda marques, bolstered by the introduction of new Mazda CX-30 CKD model to the domestic market on March 2023 as well as fulfilment of back orders of Mazda 3. Post SST exemption, total local sales volume remain robust at 5.9k unit though we expect this to normalise in coming quarters. Maintain a BUY call on BAuto with an unchanged TP of RM2.68 pegged at 13.1x PER to FY24F EPS of 20.4sen.

• Within expectations. 1Q24 PATAMI of RM100mn (QoQ: -0.4%, YoY: 99.9%) made up 32.8% of full year forecast. We deem this as inline with our expectation given that this was largely underpinned by backlog orders from SST exemption.

• Dividend. The group declared a first interim dividend of 5.0 sen per share which which implies a payout ratio of 58%.

• QoQ. BAuto’s 1Q23 revenue increased slightly by 1.6% to RM1.1bn driven by higher sales from Mazda Philippines’s operation with total unit of sale 730 unit (previously 523 unit). Despite the end of service and sales tax (SST) exemption that was reinstated in Apr 2023, the total local sales (from Mazda, Kia and Peugeot) remain largely elevated at 5,918 unit vis-à-vis 5,992 unit in 4QFY23. This underpinned PATAMI to remain robust at RM100mn.

• YoY/ YTD. Revenue rose by 51.6% YoY, thanks to the strong sales from its Mazda marques due to (i) introduction of Mazda CX-30 CKD model to the domestic market on March 2023, and (ii) fulfilment of backorders of Mazda 3. PATAMI also rose by 99.8% YoY for the same reasons mentioned earlier, as well as improved contributions from associates.

• Outlook. Currently, there is a backlog orders of 4k units coming from Mazda and around 500 unit from other marques, Kia and Peugeot. BAuto will also have upcoming new model lineup including Mazda CX-60, Peugeot New 408 and Kia All-New Sportage. In addition, Mazda Philippines’s operation is showing the recovery from the Covid-19 pandemic impact. While this poses the upside risk to our forecast, we remain cautious on factors like rising prices, uncertain situations in global conflicts, and weaker worldwide economic growth will continue to affect the overall economy and its may lead to the buyer decisions. Hence, we maintain our FY24F/FY25F earnings forecast.

• Our call. We continue a BUY call on BAuto with an unchanged TP of RM2.68 pegged at 13.1x PER to FY24F EPS of 20.4sen.

Source: BIMB Securities Research - 13 Sept 2023