The growth in Malaysia was driven by the new CX-3 model, while the Philippines market reacted positively to the Mazda2 and CX-5 models.
KUALA LUMPUR: CIMB Equities Research has reduced Berjaya Auto Bhd’s (BAuto) earnings per share (EPS) for FY17 to FY19 by 3.4% to 11.8% due to the lower volume growth in FY17.
The research house had on Friday said the lower EPS outlook was due to the persistent weakness in consumer sentiment and the depreciating Ringgit against the Yen.
“We lower our FY17F sales volume growth to 4% on-year (versus 10% previously). Nonetheless, we are still optimistic of stronger earnings from 2Q onwards, driven by new model launches such as Mazda 6 turbo diesel and CX-5 CKD, following expansion of its paint shop which effectively doubled its production capacity from 13,000 per annnum to over 25,000 units,” it said.
CIMB Research said BAuto’s revenue fell 3.7% on-year in 1QFY17 to RM493.6mil due to lower sales volume in Malaysia, where sales fell 15.9% on-year across all models except for CX-5 CKD.
It said the lower sales were mainly attributable to persistent weakness in the local consumer sentiment. Moreover, BAuto’s CKD models also experienced supply constraints due to the upgrading of its Inokom plant’s paint shop.
BAuto was also negatively impacted by higher operating expenditure due to the yen's appreciation against the Ringgit. Overall, core net profit fell 18% on-year to RM42.9mil.
On a quarterly basis, the decline in 1QFY17 revenue was a higher 7.7% as sales volume fell both in Malaysia (-4.2% on-quarter) and the Philippines (-9.7% on-quarter).
The decline in Malaysia was mainly due to the five-week upgrading works at its Inokom plant, which management highlighted also coincided with a shorter operating period due to Hari Raya holidays.
Meanwhile, its Philippine division faced stronger competition for its best-selling Mazda 3 model due to a new model launch from its competitor.
BAuto also announced that its 60.4%-owned subsidiary, Bermaz Auto
Philippines Inc (BAP), is planning to go for main market listing on the Philippines Stock Exchange.
BAP has showed robust sales growth with a FY13-16 CAGR of 92%. It also accounts for about 24% of total BAuto's sales volume in FY16. BAP is involved in the distribution of Mazda vehicles and spare parts through appointed dealers in the Philippines.
“We roll over our valuation to FY18, and reiterate our Add call with a slightly higher target price of RM2.69, still based on 14 times CY18F P/E (10% premium over the sector average due to its stronger growth).
“Successful new model launches, higher dividend payouts and potential listing of its Philippine operation are potential re-rating catalysts. Key risks to our Add call are delays in new model launches and persistent weakness in consumer sentiment,” it said.
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