KUALA LUMPUR (June 14): Bermaz Auto Bhd’s impressive results for the financial year ended April 30, 2022 have prompted analysts to raise their target prices (TPs) for the group, on the back of robust orders, better margins and attractive valuations.
While maintaining a “buy” call, MIDF Research raised its TP for Bermaz to RM2.20 from RM1.98 previously. It said the group is morphing into a multi-brand auto car conglomerate following its recent brand acquisitions, which is expected to deliver above-industry earnings and volume growth throughout the research firm’s forecast horizon.
“Coupled with [a] reasonably undemanding valuation of 11.7 times FY23 PER (price-earnings ratio) against an expected earnings CAGR (compound annual growth rate) of +12% over our forecast horizon as well as attractive dividend yield (4.3-4.7%), we continue to advocate Bermaz Auto as our top sector pick,” said MIDF in a research note on Tuesday (June 14).
The company recorded a net profit of RM78.7 million on revenue of RM897.36 million for the fourth quarter ended April 30, 2022.
Bermaz’s full-year cumulative net profit grew 16.35% to RM155.72 million from RM133.84 million a year earlier, while full-year revenue rose slightly to RM2.325 billion from RM2.29 billion.
In light of the improved results, MIDF raised the group’s FY23 profit forecast by 13% year-on-year (y-o-y) to RM177.1 million, driven by improved sales volume of Mazda, assuming no further impact from the Covid-19 lockdown this year, and further growth at newly acquired Kia and Peugeot as new product launches gain momentum. FY24 profit is expected to grow by 10.6% y-o-y to RM196 million.
CGS-CIMB Research expects Bermaz to deliver 13,000 sales for Mazda and a combined 4,000 sales for Kia and Peugeot, representing 24% volume growth in FY23. The research firm raised its TP to RM2.40 from RM2.10.
“We reiterate our ‘add’ call as the stock trades at an attractive CY23 PER of 10.4 times. It also offers a decent 5.4-6.0% dividend yield for CY22-23, supported by strong free cash flow and net cash position of RM494 million or 43 sen per share as at end-April 22,” said CGS-CIMB.
Based on expectations of better profit margins and higher sales volumes, the research house raised Bermaz’s net profit forecast to RM184.7 million for FY23 and RM204.8 million for FY24.
Source: TheEdge - 15 Jun 2022
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