KUALA LUMPUR: Bermaz Auto
results for the first of its financial year 2019 (1HFY19) Bermaz’s revenue grew by 36% on-year due to stronger sales in Malaysia (+67%), in spite of the weaker sales in the Philippines (-38%) due to the implementation of the Tax Reform for Acceleration and Inclusion law in January 2018.
The CIMB Equities Research said on Thursday Bermaz benefited from higher associates’ profit contribution on the back of higher sales volume by Mazda Malaysia Sdn Bhd (MMSB), which rose by 188% on-year.
“Overall, Bermaz posted an impressive 193% on-year core net profit growth in 1HFY19, which trumped expectations and made up 71%/62% of our/Bloomberg consensus’s FY19F,” it said.
CIMB Research said revenue in 2QFY4/19 rose 42% on-quarter to RM690.3m, mainly due to higher sales volume in Malaysia, surging 152% from 2,983 units to 7,518 units as the group continued to fulfill customers’ bookings, which mostly comprised CX-5 and CX-3 models, from the zero-rated Goods and Services Tax period.
Following the surge in sales, Bermaz posted its highest quarterly core net profit of RM73.6m in 2QFY19 vs. RM50.8m in 1QFY19. It also declared a higher interim DPS of 3.75 sen vs. 2.5 sen in 1QFY19.
Bermaz’s sales volume in 1HFY19 rose 73% on-year to 12,800 units due to improving production volume for the CX-5 model, which grew from 2,037 units in 1QFY19 to 5,233 units in 2QFY19.
“The group is targeting 18,500 units from Malaysia and the Philippines in FY19F, which implies a softer 2HFY19 in view of the competitive market and cautious consumer sentiment due to uncertainties over the domestic and global economies,” it said.
CIMB Research raised its FY19-21F EPS by 1-17% to account for higher sales volume and stronger contribution from MMSB.
Moreover, Bermaz still has over 3,000 orders in its backlog that should help drive sales volumes in 2HFY19.
“We expect Bermaz to maintain positive growth beyond FY19F, driven by new model launches, such as the Mazda 3 and CX-8, and stronger export growth from MMSB.
“We project MMSB to deliver 20% and 15% volume growth in FY19 and FY20F, respectively, on the back of new capacity expansion.
“We roll over our valuation to end-2019. We upgrade Bermaz to an Add with a higher RM2.65 TP, based on 14 times CY20F P/E, in line with the sector target given its attractive valuations, high dividend yield and new potential drivers from the export market,” said CIMB Research.