PETALING JAYA: Bermaz Auto Bhd
(BAuto) looks poised for steady growth this year, driven by its new model offerings and strategic focus on customer retention, analysts say.
While the competitive landscape in the mid-price vehicle segment remained intense, the group’s valuation continued to appear attractive, underpinned by a strong dividend yield and a promising vehicle line-up.
MIDF Research, following a call with BAuto, maintained its earnings estimates ahead of the group’s third-quarter results announcement scheduled for March 12.
However, the research house revised its target price to RM1.97 per share from RM2.21, adjusting its valuation methodology to “better reflect the intense competition in the mid-price segment”.
Despite this revision, the research house reiterated its “buy” call, citing an appealing dividend yield of 12.8%.
“We believe that BAuto’s new model offerings remain promising, and we are sanguine about the group’s efforts to prioritise customer retention over aggressive discounting,” MIDF Research stated.
The introduction of new models is expected to bolster BAuto’s performance.
The fifth-generation Kia Sportage launched as a locally assembled vehicle in December 2024, saw its initial demand affected by late deliveries in mid-January, coinciding with festive celebrations.
“At present, approximately 100 units have been sold, while about 50 remain on order,” the research house noted, adding that further updates on customer reception would be disclosed in BAuto’s upcoming results announcement.
Meanwhile, Xpeng’s sole offering in Malaysia, the completely built-up (CBU) 6G, which debuted last August, maintained a steady sales pace, averaging 130 units per month, with 150 on order.
The upcoming introduction of Deepal, a new electric vehicle (EV) brand under BAuto’s distributorship secured from Changan Automobile last November, is also expected to contribute positively.
The Deepal S07, imported from China, had been scheduled for launch last June, while the S05, sourced from Thailand, is slated for the fourth quarter of this year.
However, with Thai assembly operations commencing only in March, the launch timeline remains uncertain.
Notably, the tax exemption for CBU EVs in Malaysia is set to expire at the end of this year, which could influence demand dynamics.
EV localisation plans are also under consideration, with BAuto evaluating the feasibility of assembling the Mazda 3 locally.
“While further completely knocked down (CKD) expansion is planned, potentially including the Mazda 3 – its next best-selling model – this typically takes two to three years to materialise, requiring an annual volume of 2,000 to 3,000 units and an estimated RM30mil investment in the production line,” MIDF Research said.
The CKD segment accounted for 70% of BAuto’s total sales volume in the first half of its financial year ending April 30, 2025, and generally delivered a 3% higher margin than CBU internal combustion engine vehicles.
Plans to localise EV production for Xpeng and Deepal are also being explored, though challenges remain.
“A key challenge is meeting the 30% local-content requirement, with batteries making up about 40% of the total cost of EVs,” the research house noted.
Amid rising competition, BAuto has prioritised customer retention over price cuts.
Mazda’s total industry volume declined to 14,464 units in 2024, down 23.6% year-on-year, as Chinese entrants intensified their discounting strategies.
Instead of following suit, BAuto launched a loyalty campaign last October, offering returning customers an additional year of free warranty and maintenance.
“So far, approximately 1,000 customers have taken up the offer,” MIDF Research stated.
BAuto shares closed at RM1.31 yesterday.
