Bermaz’s TIV to do well in 3Q despite Mazda CX5 price hike
Despite the price hike, Mazda’s January 2018 TIV could test historical high levels of 1,300 to 1,400 units as orders resume moving into the new year and given strong demand for the new CX5. MIDF Research
KUALA LUMPUR: Analysts predict Bermaz Auto Bhd’s (Bermaz) third quarter of its financial year 2018 (3QFY18) to see a total industry volume (TIV) of 3,000 units, despite a price hike of Mazda’s CX5 model in January.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), pricing for the new CX5 has been raised by RM1,000 across the board from January 2018.
MIDF Research estimated that this will impact annual earnings by approximately two per cent based on its conservative FY19F CX5 volume of 6,000 units.
“This is likely to trickle through meaningfully from 4QFY18,” it said.
“Despite the price hike, Mazda’s January 2018 TIV could test historical high levels of 1,300 to 1,400 units as orders resume moving into the new year and given strong demand for the new CX5.”
MIDF Research estimated that Bermaz’s 3QFY18 TIV at 3,000 units, up 19 per cent sequentially and a whopping 37 per cent year on year (y-o-y).
The research arm noted that outstanding bookings of the new CX5 currently stand at more than 900 units.
“More importantly, the strong TIV will come with improved margins given the price hike for the CX5 in January 18 and minimal discounting.
“Half of the new CX5 sales are for special colours which are priced at a RM2,000 premium.”
MIDF Research highlighted that associate earnings comprising 30 per cent-owned Mazda Malaysia Sdn Bhd (MMSB) and 29 per centowned Inokom have been dismal in the past two quarters given low production and run-out of the old CX5.
“According to management, Bermaz’s 1HFY18 associate earnings only reflect July 2017September 2017 contribution prior to the new CX5 launch in November 2017.”
MIDF Research expected this to improve from 2HFY18 driven by launch of the new CX5 and commencement of exports of the same model to Thailand, Indonesia and Philippines.
The research arm gathered that CX5 export rate to Thailand was now approximately 1,000 units per month while production for Malaysia is at 900 per month.
At this rate, the research arm estimated total MMSB production could rise to approximately 23,000 per annum from 9,500 to 10,000 in FY16-17.
Given a combination of the aforementioned factors and along with a weaker Japanese yen, MIDF Research estimated 3Q of 2018 (3Q18) earnings to rise by more than 50 per cent qo-q, underpinning its view of an earnings gap-up from 2HFY18.
“Though our thesis on Bermaz’s earnings improvement moving into FY19F remain intact, our FY18F earnings is trimmed to RM129 million from RM170 million to reflect more conservative expectations,” the research arm said.
Nonetheless, MIDF research expected group earnings to grow by a compound annual growth rate (CAGR) of 35 per cent over FY18F to FY20F.