BAuto likely to achieve sales target on strong bookings, new launches


Maybank IB Research says it feels positive about the auto group’s prospects.

PETALING JAYA: Bermaz Auto Bhd (BAuto) is on track to achieve its target of 24,000 vehicle sales for financial year 2024 (FY24), according to Maybank Investment Bank (Maybank IB) Research.

The target is achievable driven by strong bookings, improved supply chain and upcoming launches, said the research house.

Following BAuto’s recent results briefing, Maybank IB Research said it came away feeling positive on the auto group’s prospects.

“Our earnings forecasts, ‘buy’ rating and target price of RM4.14 a share, have remain unchanged,” the research house said in a note to clients yesterday.

The group’s backlog orders totalled about 4,500 units (about 4,000 for Mazda), with monthly bookings averaging 1,800 units versus historical average of about 1,200 units, even post the sales and service tax exemption holiday, which ended in March 2023.

Maybank IB Research pointed out the completely knocked down (CKD) sales mix to normalise post backlogs fulfillment of Mazda 3 sales, which had nearly tripled quarter-on-quarter in 1Q24, benefiting from the improved supply chain.

“Most Mazda 3 backlogs are cleared, and we foresee sales returning to a normal pace with new bookings averaging about 100 units per month,” it added.

“The remaining CX3 backlogs, about 100 units should be resolved by 2Q24,” it added.

It said the CKD sales mix is anticipated to return to over 80% after backlog fulfillment compared with 1Q of 70%.

Meanwhile, BAuto is still negotiating for new CKD-Kia Sportage and CKD-Peugeot 408 models, likely driving sales growth in 2H24.

Maybank IB Research said the favourable Japanese yen and Philippine peso exchange-rate hedges, along with recent price hikes – RM3,500 for CX30 in April 2023, RM5,000 for Mazda 3 in September –are expected to sustain margins throughout the year.

The research house continued to like BAuto for its solid fundamental and resilient financials with a net cash position and strong free cash flow with minimum capital expenditure requirements on asset light business model. Furthermore, the group’s growth is underpinned by its robust pipeline of new launches and increasing CKD mix to provide good earnings visibility.

“Even with our conservative estimate of 75% dividend payout ratio (DPR) versus historical DPR of 78% to 114%, BAuto still offers an attractive dividend yield of more than 10%,” said Maybank IB Research.

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