BAASB stake seen to boost BAuto’s standing


CGS-CIMB: “In addition, we think the exercise also highlighted (French principal partner) Groupe PSA’s trust in BAuto’s capabilities to drive the Peugeot brand in Malaysia. We also gathered that Groupe PSA plans to make Malaysia as a regional export hub in South-East Asia, leveraging on its assembly plant in Gurun, Kedah.”

PETALING JAYA: Bermaz Auto Bhd’s (BAuto) position as a non-national automotive player is set to be bolstered by its enlarged stake in Peugeot distributor Berjaya Auto Alliance Sdn Bhd (BAASB).

CGS-CIMB said the move offered a good opportunity for BAuto to consolidate BAASB’s financial results into the group. “We estimate BAASB registered approximately RM1mil in net profit within the first five months of its operations (December 2020 to April 2021).

“In addition, we think the exercise also highlighted (French principal partner) Groupe PSA’s trust in BAuto’s capabilities to drive the Peugeot brand in Malaysia. We also gathered that Groupe PSA plans to make Malaysia as a regional export hub in South-East Asia, leveraging on its assembly plant in Gurun, Kedah.”

CGS-CIMB added that BAASB is targeting sales volumes of between 1, 500 and 2, 500 units in 2022 and 2023 respectively, driven by new launches such as its Peugeot 2008 sport-utility vehicle (SUV), which is scheduled for launch in the second half of 2021. “Currently Peugeot is offering two flagship SUVs under its 3008 and 5008 models, ” the research house said.

AmInvestment Bank, meanwhile, estimates net profit contribution to be minimal, ranging from RM1mil to RM3mil over the next two years. “This will be less than 2% of our 2022 and 2023 earnings estimates. Therefore, we make no changes to our forecast, ” it said.

Earlier this week, BAuto announced that it was acquiring an additional 35% stake in BAASB from Berjaya Corp Bhd for RM4.58mil cash. Post-acquisition, BAuto’s stake in BAASB will increase to 55%, from 20% previously.

BAASB was awarded the sole distributorship of the Peugeot marque in Malaysia in December last year, along with the rights of aftersales and spare parts distribution for Citroen and DS brands in Malaysia.

AmInvestment Bank said it was mildly positive on BAuto’s enlarged stake in BAASB. “This development will tighten BAuto’s grip as a stronger non-national automotive player. While we gather that profit contribution would only be minimal over the immediate term, we believe that this augurs well for the group’s next phase of growth in the medium to long term.”

UOB Kay Hian said it was neutral on the news. “According to BAuto, there will be no change in the strategic direction of BAASB after the acquisition. It will continue with the plan when BAASB was awarded the Peugeot distributorship back in December.

“BAASB’s earnings contribution to BAuto’s bottomline likely will be immaterial in the first couple of years of its operations, as sales are expected to remain minuscule.”

Before the change in distributorship, UOB Kay Hian said Peugeot sales stood at 1, 035 units and 1, 897 units in 2020 and 2019, respectively. “Management’s focus will be on streamlining operations and turning over the brand reputation before pushing for sales. It clarified that its principal for the Mazda brand, Mazda Corp, was well-informed.”

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