New CX5, exports to boost Bermaz Auto’s performance
KUCHING: Bermaz Auto Bhd’s ( Bermaz Auto) earnings recovery over the next few quarters is expected to be underpinned by contributions from the newly launched Mazda CX5, including exports of the new model to Asean countries (excluding Vietnam).
MIDF Amanah Investment Bank Bhd’s research arm ( MIDF Research) highlighted this in a recent report and pointed out that the new CX5 also saw strong bookings prior to actual launch, beating earlier estimates.
It noted that Bermaz Auto indicated that bookings for the new CX5 were opened last week.
“Within just this short one-week span, the new CX5 has already garnered some 700 firm bookings. This is already ahead of the 400 to 500 units/month implied sales target and capacity allocation (or a total of 5,000 units for FY18F),” it said, noting that the official launch of the new CX5 in Kuala Lumpur is expected within the next two weeks.
“A few hundred units of the new CX5 have already-been preproduced, ready to be delivered to buyers. We expect numbers from the new CX5 to trickle in from October onwards,” it opined.
The research team also believed that the new launch would underpin the earnings gap-up from the second quarter of the financial year 2018 (2QFY18) onwards.
“As we had alluded to in previous reports; Bermaz Auto’s earnings recovery over the next few quarters will be four-pronged; Mazda TIV pick up from new CX5 in 2QFY18, absence of old CX5 run- out discounts and price hike for new CX5 to boost margins mainly from 3QFY18 onwards, export commencement of new CX5 to Asean ex-Vietnam from 2QFY18, and the resumption in production given new CX5 launch in 2QFY18 to boost associate earnings from MMSB and Inokom as well as a stronger ringgit,” it said.
Of note, year to date, the average ringgit to yen stands at RM3.87 per 100 yen, already exceeding its FY18F assumption of RM3.90.
It also pointed out that export volume target is 11,000 to 12,000 for FY18F, reflecting seven months contribution from October 2017 till April 2018; which is slightly higher than its assumption of 10,840 units (FY18F).
“In the past year, including 1QFY18, there were negligible exports in anticipation of new CX5; we assumed zero exports for the first five months of FY18F and the circa 11,000 export volume to kick in only from October 2017,” MIDF Research said.
Overall, it re-affirm its high conviction ‘buy’ call on the stock.