PETALING JAYA: Bermaz Auto Bhd
’s (BAuto) latest quarterly results have reinforced analysts’ view that the worst of its earnings downcycle may be over.
They believe there will be a gradual recovery, driven by stronger Mazda deliveries, improving order backlogs and a firmer ringgit, although competitive pressure from Chinese marques remains a key overhang.
While earnings for the first nine months of financial year 2026 (FY26) remain sharply lower year-on-year (y-o-y), the consensus outlook has turned more constructive as recent model launches begin to lift sales momentum.
Hong Leong Investment Bank (HLIB) Research said: “The operational landscape in Malaysia is expected to remain competitive, given the aggressive launches of Chinese original equipment manufacturers with attractive price points.”
However, it noted that newly launched Mazda variants, particularly the Mazda 3 1.5L, have generated renewed market interest and improved sales since the second quarter.
The research house upgraded its call on the stock to “hold” from “sell” and sharply lifted its target price to 85 sen from 54 sen after BAuto’s third-quarter earnings exceeded expectations.
For the third quarter ended January 2026, BAuto posted core profit after tax and minority interests of RM31.8mil, up 101.8% quarter-on-quarter (q-o-q) and 29.5% y-o-y, supported by stronger group sales, disposal of Kia inventories and foreign exchange (forex) gains from ringgit appreciation.
Revenue rose 22.8% q-o-q to RM683.2mil.
However, for the nine-month period, core earnings still fell 58.2% y-o-y to RM56.4mil as lower sales volumes in both Malaysia and the Philippines and weaker margins continued to weigh on profitability.
RHB Research maintained its “buy” recommendation with a target price of 95 sen, premised on a sales recovery towards FY25 levels, Kia exits, and a stronger ringgit.
The research house expects some moderation in the fourth quarter because of fewer working days due to festive holidays, but remains positive in FY27 as delivery momentum strengthens.
RHB Research highlighted that BAuto’s Mazda order backlog has reached 3,500 units, of which 2,500 units are Mazda 3 bookings, with monthly deliveries running at 300 to 500 units.
“Given the healthy backlog, we believe Mazda Motor Corp may allocate additional Mazda 3 units to BAuto, which should further support the latter’s sales growth.”
It also sees upside from local assembly plans for Xpeng electric vehicles (EVs), which could allow tax incentives to continue beyond current imported EVs exemption timelines.
Maybank Investment Bank Research (Maybank IB) also maintained a “buy” call, raising its target price to 95 sen from 86 sen, highlighting that BAuto is on track for recovery, supported by expanded Mazda model offerings – particularly the Mazda 3 and CX-60 – favourable forex boosting margins, and reduced associate losses as operations stabilise.
Maybank IB said the trough in earnings is likely behind the company, pointing to order backlogs that have recovered to above 3,800 units from around 1,500 units previously.
It noted that the Mazda 3 and CX-60 launched in late 2025, are now key volume drivers, while Xpeng sales are benefiting from consumers frontloading purchases before EV tax incentives expire.
“We believe the trough is likely over.”
Despite the stronger operational tone, risks remain. Associate losses from Kia Malaysia continue to drag earnings, while Philippine operations remain soft amid regional competition.
HLIB Research noted that earnings prospects remain challenging in Malaysia and the Philippines despite BAuto’s net cash position of RM305.1mil, equivalent to 26.8 sen per share, which continues to underpin dividend support.
An analyst with a local research house believed dividend yield remains a major attraction, with yields ranging between 6% and 9%.
“This is supported by BAuto’s cash-rich balance sheet, making the stock appealing for income-focused investors even as earnings recovery remains gradual rather than immediate,” he said.
