BAuto soars on higher third quarter earnings

All-new CX-5 and Mazda 2 cars to drive volume growth in 2019

PETALING JAYA: Shares of Bermaz Auto Bhd (BAuto) jumped after the company’s third quarter earnings soared more than 60%.

BAuto, which is the official distributor of Mazda cars in Malaysia, saw its shares ended 14 sen higher to RM2.16 at 5pm yesterday.

RHB Research, in a report said earnings were solid on the back of robust Mazda sales volumes in both Malaysia and the Philippines.

“The all-new CX-5 launched in Malaysia last October was the key driver of sales and improved margins, given the absence of sales incentives offered in earlier quarters to clear inventories of the old CX-5, in addition to the favourable foreign exchange rates,” it said.

The research house added that associate contributions rebounded strongly after 30%owned Mazda Malaysia (MMSB) achieved a turnaround in earnings.

“This is as local assembly volumes rose as a result of the new CX-5 assembled in Kulim, which supplies both the domestic and export markets. Cumulative nine-months 2019 net profit reached 62.5% of our forecasts, which was within expectations,” said RHB Research.

CIMB Research, meanwhile, said it expected the company’s new CX-5 and Mazda 2 to drive volume growth in 2019.

It said BAuto is cautiously optimistic on delivering stronger volume growth in Malaysia and the Philippines in the fourth quarter of 2019, driven by the new CX-5 and introduction of a new variant for Mazda 2 in the Malaysian market.

The research house emphasised that the new Mazda 2 offers about 15% lower average selling prices from the existing variant, which is selling at RM90,000.

“Overall, BAuto is targeting a higher 15% volume growth in 2019 compared with 2018,” said CIMB Research.

RHB Research also concurred that it expected new models to drive earnings for BAuto, going forward.

BAuto has moved 2,518 units of the new CX-5 in the four months since its launch. Two new models are expected to be introduced this year – the Mazda 6 in April and CX-8 in August.

“The CX-8 will also be assembled locally by mid-2019, to be exported to regional markets thereafter (slightly later than previously expected). Stronger throughput volumes going forward will mean strong associate contributions from MMSB and 29%-owned Inokom.”

The research house said the CX-8 model could be a game changer for Mazda in the Philippines, where it expects strong market share gains in the SUV segment.

UOBKayHian said it is raising its 2018, 2019 and 2020 net profit forecasts by 13%, 15% and 11%, respectively, after updating its sales and margin assumptions.

“As we expect fourth-quarter 2018 sales volume to be higher than the third quarter’s 4,579 units, we estimate 2018 sales volume should grow 16.1% year-on-year to 17,103 units, driven by delivery of more CX-5 models in the fourth quarter of 2018.”

BAuto registered a 61.2% growth in net profit for the third quarter ended Jan 31, 2018, as compared to the corresponding quarter last year.

This was achieved on the back of increased sales volume from the new Mazda CX-5 model and a higher share of profit contribution from MMSB.

The company reported a 65.2% year-onyear increase in revenue to RM559.4mil during the quarter, mainly due to improvement in sales volume in both the domestic and the Philippines operations arising from the well-received response to the new CX-5 and CX-9 models launched in October and November 2017, respectively.

This brings the group’s nine-month cumulative revenue and net profit to RM1.42bil and RM82.88mil, respectively.