PETALING JAYA: Bermaz Auto Bhd
(BAuto) is eyeing for the completely-knocked-down (CKD) segment to account for 80% of its sales volume eventually.
This will give 3% to 4% points higher margins for CKD versus completely-build-up (CBU) units and should allow for robust margin expansion, moving forward.
CGS International (CGSI) Research said the launch of the Mazda CX-30 CKD model in Malaysia in March 2023 saw particularly strong traction, selling 4,599 units and making up 26.8% of BAuto’s total sales volume in nine months of the financial year 2024 (9M24).
“The strong take-up of the CX-30 model has resulted in a change in sales mix for BAuto’s local Mazda operations, with its best-selling and higher average selling price CX-5 model recording 4,911 units (-24.3% year-on-year or y-o-y) sold in 9M24,” it said in a report.
BAuto’s proportion of CKD sales by volume has continued to grow quarter-on-quarter (q-o-q), accounting for 79% of units sold during 3Q24.
The research house reiterated its ”add’’ call on BAuto with a target price (TP) of RM3.50 share.
CGSI Research believed despite the cessation of its Malaysian Peugeot operations (9.9% of financial year 2023 or FY23 sales volumes), BAuto’s local offerings (CX-30 and facelifted CX-5) will continue to see strong sales volumes and be sufficient to offset the loss of the Peugeot brand.
It believes the TP of RM3.50 a share will continue to be supported by robust 8.1% FY24-FY26 dividend yields and a strong net cash position of RM395.4mil (34 sen per share) as of Jan 31, 2024.
The key re-rating catalysts include continued market share growth with the launch of new/updated models and margin expansion from price hikes.
CGSI Research said key downside risks include new entrants to the Malaysian market (for example, Chery) gaining market share, thereby impacting BAuto’s sales volumes, and lower-than-expected margins.
