CX5 move a massive boost to Mazda M’sia operations
KUCHING: Analysts are extremely optimistic following Bermaz Auto Bhd’s ( Bermaz) executive director stating that Mazda Japan is making Malaysia one of its export hub and sees huge potential within Asean.
Via 30-per cent owned Mazda Malaysia Sdn Bhd ( Mazda Malaysia), the group targets to export the locally assembled CX5 to Cambodia, Indonesia and Myanmar in the second half of 2017. MIDF Amanah Investment Bank Bhd ( MIDF Research) said Mazda Malaysia also hopes to commence exporting to a Middle Eastern country next year, after free trade agreements are worked out at the government-to- government level to negotiate duty levels.
“The move to expand its export market underpin our view of Bermaz’s associate earnings contribution doubling by FY19F driven by commencement of exports to the whole of South East Asia by August this year,” MIDF Research said in a note.
“Prior to this, Mazda Malaysia only exported the CX5 to Thailand.
“On the back of exports expansion, Mazda Malaysia expects export volumes of the new CX5 at 14,000 per annum for the first year, before rising by 50 per cent to 21,000 in the second year.
“This will give a massive boost to Mazda Malaysia’s export volumes after having dwindled to between 3,000 to 3,500 in FY17F.”
Other than benefitting via Mazda Malaysia which is the direct exporter, MIDF Research said Bermaz also benefits via 29 per cent- owned Inokom Corporation Sdn Bhd which contract assembles the model.
“All in, we estimate associate earnings contribution to group bottomline to expand from eight per cent in FY17F to 16 per cent by FY19F.”
Meanwhile, MIDF Research also said the inclusion of Iran will further expand Bermaz’s export numbers seeing as how Iran is also part of the agreement with Mazda Japan for Bermaz’s export market expansion.
To note, Iran is a market with massive potential entailing just nine per cent vehicle penetration and 1.2 million total industry volume (TIV) per annum.
“The group is currently awaiting the outcome of government-to-government bilateral talks between Malaysia and Iran, especially on Iran’s high excise duties of about 70 per cent for imported vehicles,” it added.
“A positive outcome of the talks should trigger significant upward revisions to our export projections as we have yet to factor in Iran exports in our numbers.”
Other than export market expansion, another key takeaway from the research firm was the possibility of a further price hike for the new CX5, which it estimated at RM2,000 to RM3,000 – on top of the RM2,500 to RM3,000 across- the- board price hike implemented since January 2017.
“We have already factored in conservative domestic volume assumptions of 13,600 units for FY18F given the price hikes but expect margins to improve as a result.”