KUALA LUMPUR (June 12): Shares of Bermaz Auto Bhd (KL:BAUTO) on Wednesday charted a new all-time high since its listing more than a decade ago, thanks to stronger than expected results.

Bermaz Auto, which primarily assembles Mazda-branded vehicles, climbed as much as 2.4% or six sen to an intraday high of RM2.60, but it pared all the gains to close at RM2.53, down one sen or 0.39%.

At RM2.53, the company's market capitalisation stood at RM2.96 billion. Trading volume totalled 7.56 million shares on Bursa Malaysia.

Net profit for the financial year ended April 30, 2024 (FY2024) announced on Tuesday came in 106% of consensus forecast as analysts remained broadly bullish on Bermaz Auto, betting on introduction of new models as well as new marque under XPeng to offset potentially weaker sales ahead.

Bermaz Auto’s sales volumes will soften in FY2025 in line with expected cyclical downturn, though “we think its car sales will remain relatively resilient”, said RHB Investment Bank. The house is betting on the CX-30, CX-3, and CX-5 models, as well as the upcoming Sportage and XPeng G6 models, supporting sales.

The new XPeng marque, in particular, would help set its foothold in the domestic electric vehicle (EV) market, RHB noted. Bermaz Auto has an exclusive distributorship for XPeng vehicles in Malaysia.

Shares of Bermaz Auto have risen nearly 11% so far this year, thanks to its strong earnings. Bermaz Auto has 11 "buy" calls and four "hold" calls, according to Bloomberg. The consensus’ 12-month target price is RM2.95, a potential upside of 15% from current prices.

Net profit in the fourth quarter ended April 30, 2024 (1QFY2024) declined 10.3% to RM90.2 million from RM100.6 million over the same period a year earlier, with revenue dropping 12.6% year-on-year to RM937.5 million from RM1.1 billion.

However, Bermaz Auto closed FY2024 with a record high net profit of RM351 million, as revenue also reached an all-time high of RM3.9 billion.

TA Securities, meanwhile, expects automotive companies to adopt “more aggressive pricing strategies” for both existing and new products in order to safeguard their market share.

While Bermaz Auto has yet to determine prices for the XPeng G6, to be launched in August, the introduction is crucial, given the ongoing trend of price reductions in China for EVs amid intensifying competition, the research house flagged.

“Targeted fuel subsidies may drive demand for affordable EVs, potentially increasing hybrid and EV adoption in Malaysia,” TA Securities added.