BAuto gets ‘buy’ call on RM25m Q3 net profit

New Straits Times - - Business -

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.

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