RHB maintains 'buy' on Bermaz Auto, cuts TP to RM2.70


  • Analyst Reports
  • Wednesday, 11 Dec 2019

KUALA LUMPUR: RHB research has trimmed its FY20F-22F earnings forecasts for BERMAZ AUTO BHD after factoring a more conservative sales assumption and lower associate contribution by Inokom Corp.

The research house maintained its buy recommendation on the stock but lowered its target price to RM2.70.

In 2QFY20, the car distributor recorded RM20.4mil in earnings, which were below RHB's and consensus expectations. The latest quarter brought cumulative six-month earnings to RM70.9mil.

"Earnings were dragged by lower sales volume due to a delay in the approval of the new facelifted Mazda CX-5 and CX-8’s pricing by the Finance Ministry. "Notably, EBIT margin also deteriorated due mainly to unfavourable product mix as the CX-5 sales declined," it said in a note.

The results were made worse by lower associate contribution from Mazda Malaysia Sdn Bhd due to lower sales volume and Inokom registering a lower number of vehicles assembled.

In the Philippines, sales volume improved 33.6% over the preceding quarter to 704 units after supply contraints of the new Mazda 3 and Mazda CX-3 models were resolved.

Moving forward, the research house expects upcoming quarter to be stronger given the recent launches of the facelifted Mazda CX-8, CX-5 and pending launch of the CX-30.

"The market’s response to the CX-8 was positive, accumulating over 500 orders since October. The new Mazda CX-30 is tentatively set to be launched on 16 Jan 2020," it added.


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