CEO Morning Brief

Analysts Unperturbed by BAuto's Decision to Stop Distributing Peugeot

Publish date: Fri, 24 Nov 2023, 08:54 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (Nov 23): Analysts shrugged off Bermaz Auto Bhd's (BAuto) decision to return the distribution of Peugeot cars back to the marque's owner Stellantis NV, saying the impact would be "negligible" to the company's earnings.

In a Thursday note, Kenanga Research highlighted that the European marque only contributed to less than 2% of BAuto's bottomline.

"In FY2023, Bermaz Auto Alliance Sdn Bhd (BAA) sold 2,194 units of Peugeot vehicles and recorded a net profit of RM6.7 million or RM3.7 million based on BAuto’s 55% share of profit. It incurred RM2 million capex for a Peugeot 3S centre at Glenmarie," it said.

Meanwhile, PublicInvest Research said BAuto's capital outlay and contribution from Peugeot was minimal.

"We are neutral on this development as it is not expected to have any material financial and operational impact on BAuto," it said in a note on Thursday.

The research houses maintained their forecasts, ratings and target prices for the counter.

Kenanga Research kept its "outperform" rating and target price of RM3.22.

"BAuto guided for at least 24,000 unit sales in FY2024, driven by all-new models launching, especially boosted by the refreshed CKD model of CX-30. At present, its order backlogs stand at 5,000 units for Mazda and a few hundred units each for Kia and Peugeot.

"We like BAuto for: (i) its strong earnings visibility backed by an order backlog of 5,500 units for Mazda, Kia and Peugeot vehicles, (ii) its premium mid-market Mazda brand that offers the best of both worlds, ie products that appeal to the middle-income group and yet command superior margins than its peers in the mid-market segment, and (iii) its attractive dividend yield of about 9%," it said.

Meanwhile, PublicInvest Research said it kept its "neutral" rating on Bermaz and its target price of RM2.42.

On Wednesday, BAuto said it would return the distributorship of Peugeot to Stellantis at the end of November, after almost three years.

The group said Stellantis plans to set up its own national sales centre within the first quarter of 2024, and plans to “directly manage the sales and distribution of Stellantis vehicles as well as the introduction of other Stellantis marques in Malaysia and the Asean region”.

At the time of writing, the stock dipped one sen or 0.41% to RM2.45, for a market capitalisation of RM2.87 billion. Year to date, the stock has risen 16.11%.

Read also:
Bermaz Auto to return Peugeot distributorship to Stellantis

Source: TheEdge - 24 Nov 2023

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