PETALING JAYA: Bermaz Auto Bhd (BAuto) reported financial results that were ahead of some expectations but analysts remain cautious about the company’s outlook in the Philippines.
In a note to clients, Hong Leong Investment Bank’s research unit said BAuto’s Malaysia operations will continue to leverage on the sales and services tax exemptions until
However, for another major market of the group, the Philippines’, its near-term outlook remained challenging due to the implementation of the GCQ (General Community Quarantine), to control the outbreak of Covid-19 in the country.
Meanwhile, RHB Research noted that recovery of the Philippines market may continue to be sluggish.
“Invoiced sales of Mazda vehicles in the Philippines was up 25% quarter on quarter but down 48% year-on-year.
“However, effective February, there will be further provisional excise duties on imported cars – cash bonds of imported passenger cars, and light commercial vehicles, ” it said.
The research house said with this measure lasting 200 days, it could potentially delay Bermaz Auto’s recovery in the country, as customers would have to bear the higher price tag.
However, it noted that following better-than-expected results announced on Wednesday, it was tweaking BAuto’s FY21-23 earnings up by 14%, 0%, and -5% after imputing better domestic sales volumes and higher associate contribution.
“This is offset by lower sales volume assumptions in the Philippines, ” RHB Research said.
Despite these changes, the research outfit said it was keeping its target price for BAuto at RM1.70, in line with its 5-year historical average.
“Downside risks include a softer ringgit against the Yen and weak consumer sentiment.”
Hong Leong meanwhile also said it was keeping its target price for BAuto at RM1.40.
Despite the weak nine months FY21 results, BAuto has a healthy balance sheet position with net cash of RM454mil or 39.1sen per share as of end 3QFY21, it said.
The commencement of the vaccination programme in Malaysia and the Philippines may improve market sentiment towards end of this year, it said adding that upcoming new model launches include MX30, BT-50 and CX-30 CKD.
“Furthermore, BAuto is believed to be the front-runner to secure the distributorship for the Kia marque in Malaysia.”
At last look, the BAuto stock was at RM1.41, valuing the entire group at over RM1.64bil.