Bermaz Auto 1Q results within expectations

KUALA LUMPUR: Bermaz Auto Bhd’s (BAuto) results for the first quarter ended July 31, 2024 (1Q25), came largely in line with analysts’ expectations, despite reporting a smaller profit.

The Mazda vehicle distributor posted a 30% lower net profit of RM70.2mil in 1Q25 compared to RM100.2mil in 1Q24.

Its revenue fell 22.3% to RM846.2mil from RM1.09bil previously, mainly due to lower sales volume from its domestic operations.

“BAuto’s 1Q25 net profit met expectations, despite plunging 30% year-on-year (YoY) as the sales volumes of Mazda and Kia vehicles fell on intense competition from Chinese-made vehicles, and on rising costs of its imported units on ringgit’s weakening against the Japanese yen,” Kenanga Research said.

The research house said BAuto’s 1Q25 core net profit came in within its forecast and the consensus estimate at 25% and 23%, respectively.

BAuto declared a first interim net dividend per share of 3.50 sen, as expected

“It has attractive new launches planned for FY25 to remain competitive. We maintain our forecasts, target price of RM2.45 and market perform call,” Kenanga said.

Meanwhile, MIDF Research said BAuto posted a core patami (profit after taxation and minority interests) of RM68.6mil for 1Q25, aligning with expectations at 20%/22% of the house/consensus full-year estimates.

It noted that the group announced a first interim dividend of 3.50 sen per share, reflecting a 60% payout ratio.

MIDF said upcoming launches include the Mazda CX-60 and Kia Sportage (CBU in 4QCY24 (2HFY25), with the latter expected to drive volume in FY25F.

However, the research house has lowered its target PER to 10.3x (the 5-year historical mean) from 11.8x, due to anticipated increased competition in the mid-range segment.

“Consequently, our target price has been adjusted to RM3.03 (10.3x FY25F) from RM3.50. We maintain a ‘buy’ call, as the stock is trading at -0.5SD below its historical mean and offers an appealing dividend yield of 10%.

“BAuto maintains a healthy balance sheet with a net cash position of RM324.1mil (27.6 sen per share) as of 1Q25,” it said.

Meanwhile, BAuto, through its 100%-owned subsidiary Bermaz Capital Sdn Bhd (BCSB), has agreed to subscribe to 33.0 million new shares in EP Manufacturing Bhd (EPMB), representing about 15% of EPMB’s issued share capital.

Post-acquisition, BAuto will hold an 11.54% equity stake, making it the second-largest shareholder in EPMB.

TA Securities believes the acquisition would provide long-term growth potential as EPMB plans to allocate RM100mil for the development of a manufacturing hub for ICE and EVs at Hicom Pegoh Industrial Park, following two vehicle assembly agreements secured this year.

The research house said funding is not an issue as the group had RM525mil in cash as of July 31.

“With EPMB’s annualised profit of RM14.9mil, the acquisition is expected to raise BAuto’s FY26 earnings by less than 1%, after netting out interest savings,” it said.

BAuto fell two sen, or 0.84% to RM2.35 at 10.33 am. It has appreciated 0.86% so far this year.