PETALING JAYA: Better earnings are expected for BERMAZ AUTO BHD (BAuto) in the second half of its current financial year ending April 30,2020, on the back of anticipated demand for new and existing Mazda models.
AllianceDBS Research said in a report yesterday the second quarter of its current financial year only captured a portion of the company’s newly launched facelift.
“As the second quarter only captured one-and-a-half months sales of the new facelift CX-5 model (pic) and didn’t record CX-8 sales (which only received pricing approval in mid-November), we expect sales contribution from these models and earnings to improve in the second half of its current financial year.
“Upside to earnings may come from better sales of new models, especially the CX-8 and higher-than-expected contribution from its associates, ” it said.
BAuto distributes Mazda vehicles in Malaysia and the Philippines.
CGS CIMB meanwhile said it expects earnings to improve from the group’s Philippines operations.
“We expect stronger volume delivery from the Philippines in the second half of 2020, driven by the introduction of the CX-8 this month. The group should also benefit from favourable foreign exchange following the 6.6% depreciation in the Philippine peso against the ringgit since March.”
The research house however is cutting the company’s 2020 to 2022 earnings per share by 5% to 7%, in view of lower sales from its Malaysian operations.
“We project a wider 18% year-on-year sales volume decline in 2020. Nevertheless, we expect BAuto to deliver stronger earnings in the second half of 2020 on the back of a projected pick-up in sales volume, driven by the CX-5 and CX30 models.”
Kenanga Research meanwhile has an ‘outperform’ call on the stock.
“We like BAuto for its expected earnings recovery from the stream of all-new models, superior margins above industry peers and steady dividend yield of around 7%, ” it said.
BAuto reported a net profit of RM20.39mil for its second quarter ended Oct 31 compared with RM73.92mil in the previous corresponding period.
Revenue in the quarter stood at RM457.17mil compared with RM690.32mil a year earlier, largely due to a lower sales volume from the domestic operations, partially offset by higher revenue recorded by the Philippine operations.
In a Bursa Malaysia filing on its second quarter earnings, BAuto said the lower sales volume for the period was mainly attributed to the expected reduction in demand for the phased out CX-5 model in favour of the new facelift CX-5 model launched on Sept 30.“Although the new facelift CX-5 and the all-new CX-8 models were launched at end-September and early October, the delivery of some of the vehicles was delayed by the resolution of certain pricing issues, ” it said.
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