RHB Research said it has revised downwards its forecasts for 2025 to 2027 by 11% to 14%.
PETALING JAYA: Car buyers may want to switch to cheaper brands, but vehicle distributor Bermaz Auto Bhd’s contrarian approach of maintaining its prices is likely to help preserve its appeal in the second-hand market, analysts say.
In a report, RHB Research said competition has indeed tightened due to the influx of China’s marques and Bermaz Auto has not been immune to the price war.
However, its value is undemanding, trading at 6.2 times, below its historical mean.
The research house said the car distributor expanded into the electric vehicle (EV) market by offering two Chinese brands, Xpeng and Deepal.
“Xpeng, which launched last August, managed to sell about 400 units of the G6 sport utility vehicle (SUV), most of which were delivered in the fourth quarter of last year.
“Deepal, on the other hand, will make its local debut in the second half of this year, with its S07 SUV model,” RHB Research said.
RHB Research said given the still-niche EV market on top of the booking rate of about 100 units per month for XPeng, it does not believe the brands will be a major contributor to Bermaz Auto’s earnings.
The research house said the distributor delivered 14,800 units of Mazda vehicles in 2024, which was 25% lower year-on-year.
“This decline is mainly due to increased competition. This is specifically within the non-national market segment as Chinese carmakers gained a foothold in the local automotive scene,” it said.
This was evident by the declining market share to 1.8% last year for Mazda, as another Chinese brand, Chery, gained market share of 2.4% and became the most popular non-national brand after Toyota and Honda in 2024.
Additionally, Kia’s performance dropped 45% year-on-year in 2024, due to the intense market dynamics as well as the removal of the diesel subsidy that put a dent particularly for its diesel-powered Carnival SUV.
“However, it recently launched the Kia Sportage in December with a competitive price tag. Ranging from RM147,000 to RM187,000, we think this would be a volume-heavy model.
“However, considering the launch was later than we expected, we believe its impact to earnings will materially be seen in 2026,” RHB Research said.
The research house said it was maintaining its “buy” call on the carmaker with a lower target price of RM2.30 from its previous price of RM2.65.
The research house said that the 42% drop in Bermaz Auto’s share price over the last 12 months was overdone.
However, this had left its valuation appealing and its 13% yield attractive.
“We have revised downwards our forecasts for 2025 to 2027 by 11% to 14% as we cut our Kia volume forecasts and increase operating-expense assumptions given our over-bullish estimates previously.
“We keep our Mazda volume assumptions unchanged for 2025,” the research house added.