Kenanga downgrades Bermaz Auto, SST exemption 'unexciting'

  • Analyst Reports
  • Friday, 12 Jun 2020

KUALA LUMPUR: Kenanga research has downgraded Bermaz Auto Bhd to "underperform" as its FY20 earnings results failed to meet expectations while consumer spending is expected to remain cautious moving forward.

It added that the government's sales tax exemption for the purchase of passenger vehicles will not be able to offset the weak demand.

"Despite the recent announcement of SST exemption for CKD (100%) and CBU (50%) until 31st Dec, the quantum of vehicles prices reduction, i.e. CX-5 by average 3-4%, in our view, is unexciting, especially during this economic uncertainties which is exacerbated by stringent hire-purchase approvals," it said.

Kenanga slashed its FY21 core net profit forecast by 33% as its expects lower sales from cautious consumer spending on big-ticket discretionary items. It cut its target price on Bermaz Auto to RM1.30 from RM1.40 previously.

In FY20, the Mazda distributor posted a Patami if Rm100.5mil, which was 62% lower year-on-year. The result came to 74% and 87% of Kenanga's and consensus estimates due to lower-than-expected sales.

Mazda sales for the year was 11,711 units, which was 38% lower than in the previous year. The weak result was also owing to lower associate contribution due to lower production volume while the order delivery for the all-new CX-5 and CX-8 were delayed due to pricing approval issues.

Bermaz Auto did not declare a dividend for the quarter, which left its total dividend payout for the year at 7.5 sen, missing Kenanga's expecation of 11.6 sen.
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Kenanga Research , Bermaz Auto , Mazda , SST


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