CIMB Research retains Hold for Bermaz at RM2.30 TP

KUALA LUMPUR: CIMB Equities Research is retaining its Hold call for Bermaz Auto Bhd with a higher target price of RM2.30 from the previous RM2.14.

It said on Wednesday it raised its FY19-20F EPS by 2%-3% to account for higher associates’ profit contribution.

CIMB Research said the higher target price was based on 14 times CY19F P/E, in line with the target sector price-to-earnings (P/E). 

“Successful new model launches and higher dividend payout are key upside risks, while weaker earnings delivery and lower dividends are key downside risks,” it said.

The research house said the results for the financial year ended April 2018 (FY4/18) were in line at 101% of its and Bloomberg consensus forecast.

Core net profit in FY4/18 grew by 10.3% on-year, driven by higher sales volume and stronger associates’ profit contribution from MMSB and Inokom.

“We expect Bermaz to record a lower 7% volume growth in FY19F (vs. 12% in FY18) due to the delay in the launch of the new (Mazda) CX-8 and weak outlook in the Philippines.

CIMB Research said Bermaz’s revenue grew 20% on-year due to higher sales volume in Malaysia (7%) and the Philippines (4%). 

Earnings before interest, tax, depreciation and amortisation (Ebitda) in FY4/18 rose by 4% on-year due to higher sales and better volume mix of premium models in Malaysia. 

Overall, FY18 net profit grew by 10% on-year, after stripping out RM7.9mil forex gain. Bermaz declared total dividend per share (DPS) of five sen in 4QFY18, bringing FY18 DPS to 10.4 sen (vs 11.65 sen in FY4/17), ahead of its expectation.