BAuto gets ‘buy’ call on RM25m Q3 net profit
KUALA LUMPUR: MIDF Research has issued a “buy” call on shares of Bermaz Auto Bhd (BAuto), the official distributor of Mazda cars and spare parts in Malaysia, with a target price of RM2.50 each.
This is after the company posted a RM25 million net profit, which was higher than consensus and 81 per cent of MIDF Research’s full-year forecast, in the third quarter.
“We stick to our conviction that the worst is over for BAuto. One of key earnings catalyst in the next 12 months will be a sales pick-up in the Mazda 2 completebuilt-up units, notably the lower pricing for a limited batch of 1,000 units. It will enjoy additional margins of RM1,600 per car,” it said in a report.
The research house said BAuto was also upbeat on the introduction of the facelifted Mazda 2 and Mazda 3 in April or May. Also of note is the start of Mazda CX5 exports in August.
Other key catalysts would be the attractive dividend yield of 8.6 per cent underpinned by net cash, which accounts for 12 per cent of market cap, and the unlocking of value from the listing of BAuto Philippines, it said.
On a cautious note, however, MIDF Research said BAuto’s fourth-quarter financial year 2017 results would reflect the initial impact of the two to three per cent price hikes undertaken in January.
“This should be positive for margins, but we are cautious on the impact on volumes, hence our conservative volume forecasts and the reason we are keeping our numbers for now, despite the slight outperformance,” it added.