Recently, Bermaz Auto Berhad (BAUTO, 5248) released its latest financial performance report, which showed a somewhat subdued performance. Does this signify a decline in automobile demand in Malaysia, or are there other factors at play? Let's delve into it without delay.

Revenue Comparison (YoY -8.14%, QoQ -10.96%)

For the third quarter ending January 31, 2024, BAUTO recorded approximately RM895.50 million in revenue, representing a decrease of about 8.14% compared to approximately RM975.96 million in the same period last year. This decline is primarily attributed to a decrease in automobile sales volume, particularly in the Mazda brand, due to reduced production output.

Similarly, compared to the preceding quarter, BAUTO's revenue decreased by approximately RM110.44 million or 10.96%, largely due to decreased Mazda automobile sales volume. The decline is also attributed to reduced Kia brand automobile production leading to a decrease in export sales.

It is worth noting that BAUTO's current order backlog is maintained at 2,200 to 2,500 units, with the majority coming from the Mazda brand. Therefore, Mazda brand automobiles are expected to contribute significantly to revenue in the first half of 2024.

Net Profit Comparison (YoY -19.22%, QoQ -21.74%)

Affected by the slowdown in Mazda brand automobile sales, the company's net profit decreased by approximately 19.22% year-on-year, reaching RM70.50 million. Similarly, compared to the preceding quarter, the company's net profit also declined by approximately RM19.59 million or 21.74%.

The decrease in net profit quarter-on-quarter is also attributed to increased promotional activities for the Kia brand during November and December 2023.

Despite the decline in net profit for this quarter, BAUTO announced the distribution of a third interim dividend of RM 0.0425. The ex-dividend date is April 17, payable to shareholders on May 3, 2024.

Outlook

In spite of facing challenges such as inflationary pressures and geopolitical uncertainties, management anticipates continued growth in the automobile industry. As such, the management revealed plans to launch a series of new car models this year, including the Mazda CX-60, Kia Sportage, and Kia EVI.

Furthermore, BAUTO officially ceased its business as the distributor of the Peugeot brand on February 29, 2024, which will result in a slight adjustment in the company's future revenue.

However, exciting news emerged as BAUTO recently announced acquiring the distribution rights of Chinese electric vehicle manufacturer XPENG Motors, allowing them to distribute, sell parts, and provide after-sales services for XPENG vehicles in Malaysia.

According to CNBC reports, XPENG Motors delivered a total of 141,601 units globally in 2023, marking a 17.00% increase from the previous year. This raises the question: how much revenue will XPENG Motors contribute to BAUTO? Let's await the developments eagerly.

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Disclaimer: The above is purely for educational purposes and reflects personal opinions. It does not constitute any buying or selling recommendations.

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