PETALING JAYA: Bermaz Auto Bhd (BAuto) may be experiencing an earnings growth delay following the effects of the Covid-19 pandemic on its financial results.
In their reports, research houses were mixed on the outlook for BAuto, with MIDF Research maintaining its buy call while RHB Investment Bank Research kept its neutral call on the stock.
MIDF Research said its forecast for BAuto for the financial year 2023 remains unchanged and had revised its target price for BAuto upwards to RM2.35 from RM2.20 previously.
“We now project Mazda, Kia and Peugeot’s forecasted financial year 2022’s (FY’22) total industry volumes (TIV) at 12,000, 900 and 1,000 units respectively.
“For Mazda, this reflects a 11% drop year-on-year (y-o-y) TIV contraction,” MIDF Research said.
“We now expect FY’22 forecast earnings to fall 8% y-o-y, before rebounding by 58% y-o-y in FY’23 driven by a 41% y-o-y aggregate volume growth of the three marques under BAuto,” the research house added.
Meanwhile, RHB Research kept its neutral call on BAuto with a target price of RM1.77 and noting that its first quarter results were broadly in line with expectations.
“We expect demand for new vehicles to stay robust for the remaining months of 2021, running up to the end of the sales and service tax (SST) exemption period,” RHB Research said.
“However, we believe demand will likely be crippled during the higher vehicle price adjustment period post the SST’s reintroduction,” the research house added.
RHB Research said it is expecting a stronger set of results for the remaining months of 2021 following the run-up to the end of the SST exemption period.
It pointed out that BAuto’s earnings before interest and taxes margin of 5.1% was better than the previous fourth quarter’s 1.9% margin and this was supported by cost-savings measures implemented between the two periods.
“As per our last conversation with its management, the outstanding backlog for Mazda vehicles stands at about 1,200 units and will be catered through BAuto’s current inventory of around 1,200 units,” RHB Research said.
“Vendors have sufficient inventory for the next one to two months, and daily bookings are up to 30 units per day since the relaxation of rules from 10 to 15 units per day during the lockdown period,” it pointed out.
RHB Research also said chip shortages will likely affect the completely built up units: mainly for Mazda 3 and CX30 models. It added that “the near-term impact remains manageable, as there is sufficient inventory on hand.”
The research house said that there were no changes to its earnings forecasts.
“We keep our 12 times FY’23 forecast price-to-earnings ratio unchanged, which is close to the sector average.
“The downside risks include a softer ringgit against the Japanese yen and weak consumer sentiment,” RHB Research said.