Maybank IB maintains 'buy' on Bermaz Auto

KUALA LUMPUR: Maybank Investment Bank Research has maintained its "buy" call on Bermaz Auto Bhd as the latter looks to revive the Peugeot brand in Malaysia and the possibility of expanding its distributorship of other marques under Group PSA.

"The distributorship may expand beyond Peugeot, should this partnership be successful.

"Under Group PSA, it has various marques and EV/ hybrid models, an untapped opportunity for the Bauto (Mazda currently lacks in the EV space)," said the research house, adding that it sees more positives than negatives in the venture.

According to Maybank IB, the joint venture between Bermaz Auto and Berjaya Corp, Berjaya Auto Alliance Sdn Bhd (BAASB), will offer a 5+5 year warranty and free maintenance plan for buyers of Peugeot vehicles and deliver a quick service turnaround.

This will be a part of its immediate strategy as distributor after replacing Nasim Sdn Bhd to restore confidence in the Peugeot brand, which has been plagued by poor after-sales services and expensive and unavailability of parts.

"BAASB is optimistic of turning around the Peugeot brand (i.e. perception, credibility, sales, earnings) within a 24-months period.

"With minimal capex, we estimate BAASB to turn profitable by 2nd year of operations, generating net profit of MYR8m-10m pa," said Maybank IB.

The research house added that it is positive over BAASB's target to quadruple its sales to 4,000 units per annum.

Currently, the distributor only has 2 CKD models to offer in the market, the 3008 SUV and 5008 MPV. The third CKD model, the SUV 2008, will roll out in 2021.

Maybank IB maintained its earnings estimates on Bermaz Auto and target price of RM1.65, pegged to 14x FY22 price-earnings ratio.
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