Period

4Q15/FY15

Actual vs. Expectations

Within expectations. The group reported 4Q15 net profit (NP) of RM55.3m (+15 YoY; +19% QoQ), bringing its FY15 NP to RM215.4m (+54%) which made up 104% and 100%, of our and the consensus, full-year NP forecast, respectively.

Dividends

Above expectations. A fourth interim single-tier dividend per share (DPS) of 2.75 sen and a special single-tier dividend of 3.25 sen were declared, bringing the YTD net DPS to 14.6 sen which implies 56% dividend payout ratio (DPR), vis-à-vis our and the consensus’ conservative DPS forecasts of 9.6 sen and 10.9 sen, respectively. Key Result

Highlights

YoY, the FY15 revenue registered a robust growth of 26% on the back of higher vehicle sales in Malaysia (+2.7k to 12.2k) as a result of robust demand for its Mazda SkyActiv models such as new Mazda2, CX-5 CKD, Mazda3 and Biante in Malaysia, and also higher sales contribution from Berjaya Auto Philippines (BAP, +1.3k to 3.6k) underpinned by Mazda3 model. Compounded by the higher margins arising from the reduction of import duties for <2.0cc Mazda car as well as yen depreciation, PBT soared by 67%.

QoQ, 4Q15 revenue increased by 9% due to higher sales volume of Mazda vehicles (spearheaded by the new Mazda2) in Malaysia. Coupled with the higher contribution from the associates (returned to profit in 4Q: RM3.6m from 3Q losses of RM0.7m, which was previously affected by the temporary shutdown of Inokom’s paint shop in October and part of November for upgrading works) as well as slight improvement in margins, PBT improved by 17%.

Outlook

On the macro view, we believe consumers will continue to adopt a cautious stance amidst the uncertainties over car prices from the GST implementation, thus affecting the whole automotive industry in 2Q15 (partly affecting BJAuto’s 1Q16 sales performance).

Nonetheless, we see Berjaya Auto to be the least affected automotive player, with the macroeconomic headwinds to be buffered by: (i) its targeted customer base (middle to high income groups are able to weather rising cost of living better vis-a-vis lower income group), (ii) sustainable margin on the back of lower import duties from FTA with Japan and favourable exchange rates (with the huge exposure in Japanese Yen, which is currently still on a soft trend), and (iii) attractive new model such as CX-3 SUV and MX-5.

Meanwhile, we are also POSITIVE on the group’s proposed bonus issue of 2 bonus shares for every 5 existing shares held, back then in 29th April 2015, for higher stock liquidity. Note that the approval from the shareholders has been obtained at the EGM, with entitlement date to be set at 25 June 2015.

Change to Forecasts

Post-results, our FY16E had been marginally raised by 3% for house-keeping purposes.

Rating

Maintain OUTPERFORM

Valuation

Our TP has been raised to RM4.39 (from RM4.29). This is based on a targeted 13.6x FY16E PER; a valuation which is broadly in line with peers.

Risks to Our Call

Lower-than-expected vehicle sales.

Strengthening of JPY vs MYR.

Source: Kenanga Research - 12 Jun 2015