We maintain our BUY call for Berjaya Auto due to its:

1. Attractive product pipeline going forward;

2. Aggressive expansion from its Philippines operations, helped by a booming auto market (projected growth of 15% in 2016); and,

3. Strong ability to capture market share (2.4% YTD from 1.5%).

Continuously filling its product pipeline. We expect Berjaya Auto (BAuto) to maintain an interesting product launch schedule in 2016, mainly from its facelifted models and diesel variants. The face-lift completely knocked down (CKD) CX-5 was recently launched in February, while the CKD CX-3 is anticipated to hit the market by end-2016. As for its “diesel wave”, we believe Mazda 6 wouldbe introduced by mid-year. The diesel CKD CX-5 is also likely to be offered, as the model is already being assembled in Malaysia for the Thailand market.

Strong growth from the Philippines. The Philippines operations recorded a quarterly sales growth of 41.8% YoY, driven largely by the Mazda 2 and Mazda3, which saw an increase of volume by 69.3% and 36.4% YoY respectively. ThePhilippines market would become increasingly significant for BAuto, withindustry sales expected to grow 15% to 350,000 units.

Forecasts and risks. We revised our earnings forecasts for FY16-18 down by 9.4%, 3.7% and 5.0% respectively. Downside risks for our recommendation and TP include: i) unfavourable forex movements, ii) disruption in product pipeline, and iii) lacklustre consumer spending.

Maintain BUY. We reiterate our BUY call with unchanged MYR2.40 TP (10% upside), after rolling forward our base year to FY17 based on an unchanged 12x target P/E (from FY16), which implies a P/BV of 4.7 (discount from its historical average P/BV). We like BAuto for its strong product pipeline, robust growth in the Philippines and ability to gain market share.