Bermaz Auto targets to sell 19,000 Mazda units in FY19

Employees work on the production line of the CX-5 model car at the Mazda Sollers Manufacturing Rus joint venture plant of Sollers and Japanese Mazda in Vladivostok, Russia September 10, 2018.

KUALA LUMPUR: Bermaz Auto Bhd is targeting 19,000 units from Malaysia and the Philippines in FY19F, CIMB Equities Research says. 

In its research note issued on Thursday, it said the sales target implied a softer 4QFY19 in view of the competitive market and cautious consumer sentiment due to uncertainties over the domestic and global economy. 

“Nevertheless, we expect Bermaz to maintain healthy sales volume in FY20F on the back of new model launches, such as Mazda 3 and CX-8 which are expected to be launched in 2HCY19.

“Maintain Add with a higher RM2.85 TP, still based on 14 times CY20F P/E, in line with the target sector P/E,” it said. 

Bermaz is its top sector pick due to its robust growth prospects, driven by multiple new model launches, proxy to export growth and attractive 6.9% CY19F yield.

“Rising competition in the SUV segment, weaker earnings delivery and lower dividend are key downside risks to our call,” it said.

Revenue in 3QFY4/19 grew by 12.7% on-quarter to RM778mil, driven by higher sales volume across Malaysia (11%) and the Philippines (46%) from higher demand for the CX-5, CX-3 and Mazda 3 in the Philippines. 

Following the surge in sales, Bermaz posted another record quarterly core net profit of RM81.3m in 3QFY19 vs. RM73.6m in 2QFY19. It also declared a higher interim DPS of 4.5 sen vs. 3.8 sen in 2QFY19.

For 9MFY19, Bermaz’s revenue grew 37% on-year due to stronger sales in Malaysia (+72%), in spite of weaker sales in the Philippines (-42%) due to the implementation of the Tax
Reform for Acceleration and Inclusion law in January 2018. 

In addition, Bermaz also benefited from higher associates’ profit contribution from 30%-owned Mazda Malaysia Sdn Bhd (MMSB). MMSB posted RM150m pretax profit in 9MFY19 (vs. RM10m in 9MFY18).

Overall, Bermaz posted an impressive 148% core net profit growth in 9MFY19, which trumped expectations and made up 100%/93% of its/Bloomberg consensus FY19F.

“We raise our FY19-21F EPS by 5-17% to reflect higher sales volume projection and stronger contribution from MMSB. We project MMSB to deliver 20-21k units sales volume in FY19F, and 25k in FY20F on the back of higher demand for SUV models. 

“Meanwhile, we learnt that Bermaz is exploring a new complete-knocked-down (CKD) localisation project with MMSB and Inokom that would target Malaysian and export markets,” it said.