KUALA LUMPUR: AmInvestment Bank Research has raised its earnings forecasts on Bermaz Auto Bhd following news of its joint venture with Kia Motors Corp.
"We maintain our BUY call on Bermaz Auto (BAuto) with a higher fair value of RM1.80/share (from RM1.74/share previously) as we roll over our valuation to FY22F with a PE of 13x and after tweaking our earnings estimates higher," said the research house.
It said it is positive on the development as it will anchor Bermaz Auto's foothold as a stronger non-national auto player with two prominent brands under its belt.
Despite a guidance that earnings contribution would not be significant in FY22, AmInvestment expects it would augur well for the group's next phase of growth in the medium to long term.
Yesterday Bermaz Auto said it had formed a strategic partnership with Kia Motors to manufacture, assemble and distribute Kia vehicles in Malaysia.
Bermaz Auto will hold a 33.3% stake in the manufacturing segment under an entity known as Kia Malaysia Sdn Bhd, as well as 60% equity in the distribution segment under a company called Dinamikjaya Sdn Bhd.
Meanwhile the research house said it is excited on the third potential Mazda CKD programme, which is expected to come to light soon.
"We understand that the third Mazda CKD model would make its debut in 4QCY22," it said.