Affin Hwang keeps ‘buy’ call on BAuto with RM1.53 target price

KUALA LUMPUR: Bermaz Auto Bhd’s (BAuto) sales volume in the near term will continue to benefit from the sales tax exemption until June 30, according to Affin Hwang Investment Bank Bhd.

Affin Hwang analyst Chow Wei Nien said in a report yesterday a gradual economic recovery in tandem with Covid-19 vaccine rollout should also aid car sales, especially in the second half of the year.

The research firm has maintained its “buy” rating on BAuto with an unchanged target price of RM1.53 per share.

“Valuation looks undemanding at this juncture, considering the longer-term gradual recovery off the low base in financial years 2020 and 2021.”

He said a successful distribution outcome would serve as a strong catalyst for BAuto, which could provide further upside risk to its forecasts.

BAuto is said to be seeking the distributorship rights for Peugeot vehicles in Malaysia.

However, he said key downside risks included supply constraint on Mazda models, foreign exchange exposure and prolonged lockdowns.

BAuto’s net profit rose 21.8 per cent to RM33.08 million in the third quarter ended Jan 31, from RM27.15 million previously.

BAuto told Bursa Malaysia this was mainly due to higher profit from domestic operations.

Its revenue increased 27.9 per cent to RM597.98 million from RM467.46 million in the same period a year ago.

For the nine-month period, BAuto’s net profit fell 31.5 per cent to RM67.12 million from RM98.05 million, while revenue rose 13.01 per cent to RM1.65 billion from RM1.46 billion previously.