According to a press release, its 20% associate company, Berjaya Auto Alliance SB (BAASB), was awarded the sole distributorship of new vehicles under the PEUGEOT marque and the rights of aftersales and spare parts distribution for vehicles under the PEUGEOT, CITROEN and DS marques in Malaysia by Groupe PSA, SA of France. We are long-term positive on this partnership which is still in the preliminary stages and more details will be announced soon with expected official ignition on 1QCY2021. Maintain MP with a TP of RM1.40.

PEUGEOT marque driving in, along with larger after-sales service for CITROEN and DS vehicles. In a press release, its 20% associate company, Berjaya Auto Alliance SB (BAASB), was awarded the sole distributorship of new vehicles under PEUGEOT marque and the rights of aftersales and spare parts distribution for vehicles under the PEUGEOT, CITROEN and DS marques in Malaysia by Groupe PSA, SA of France. Note that, BAASB is a newly incorporated company in which Berjaya Corp and Bermaz hold 51% and 20% stakes, respectively, and the balance stakes held by promoters. The partnership is still in the preliminary stages and more details will be announced soon. The current distributorship under the Naza group will gradually be phased-out to BAASB, which we believe will officially start on 1QCY2021. Note that, BAASB is only responsible for distributorship, managing and improving the existing dealers which are already selling the marques. Whereas, the CKD assembly will still be under Naza Automotive Manufacturing SB, located in Gurun, Kedah (annual capacity of 50k units/year, NAM currently produces Kia, Peugeot and Citroen vehicles for the Malaysian market as well as for export)

Peugeot sold c.2k units/year (c.15% of Mazda sales). Based on MAA data, on average, Peugeot sells c.2k units/year (c.15% of Mazda sales). The sales have been trending weaker since 2015 at 2,986 units and 1,897 units as at 2019. Based on 10MCY20 data, Peugeot sold 927 units (-43%), largely affected by the pandemic.

All-new Peugeot 2008 and Malaysia as an export hub for Peugeot. Mrs Laurence Noel, the Senior Vice President South East Asia Groupe PSA noted that the Peugeot range of SUV such as the 3008 and 5008 has garnered a lot of attention in Malaysia and it will introduce the all- new Peugeot 2008 in Malaysia (CY2021). Further to that, Peugeot aims to continuously revolutionize the customer experience together with the new partner, BAASB, and maintaining Malaysia as its export hub for the region. Dato’ Sri Ben Yeoh (BAUTO ED) expects the new venture to contribute positively to BAUTO’s future earnings base. PEUGEOT, CITROEN and DS are European automobile marques well-known for their driving comfort, smooth handling, modern designs, durability and state-of-the-art technology.

Exciting new launches ahead. BAUTO had launched the all-new Mazda 3 Sedan and Hatchback (CBU, July 2019), face-lifted and turbo variants of CX-5 (CKD, 22nd Oct 2019), all-new CX-8 (CKD, 13th November 2019), all-new CX-30 (CBU, 15th January 2020), 2020 Mazda CX-9, face-lifted Mazda 2 and 2020 Mazda MX-5 RF (3rd March 2020). BAUTO will also introduce the face-lifted CX-30 CKD (CY2021), and all-new Mazda MX-30 (CY2021).

Maintain MARKET PERFORM with unchanged TP of RM1.40 based on 12x CY21E EPS (at 5-year fwd historical mean PER). Risks to our call include: (i) lower-than-expected car sales volume, and (ii) unfavourable forex.

Source: Kenanga Research - 2 Dec 2020