The new facelift of the Mazda CX-5 is expected to be launched this month
By SULHI KHALID / Pic By MUHD AMIN NAHARUL
THE launch of new Mazda car models is expected to drive sales for Bermaz Auto Bhd in the domestic market.
The new facelift of the Mazda CX-5 is scheduled to be unveiled at the end of this month, while the seven-seater Mazda CX-8 is slated to be launched next month and Mazda CX-30 by early next year.
Commenting on the group’s outlook, Public Investment Bank Bhd said the higher expected sales could be partially offset by slower demand from Bermaz’s Philippine operation.
“Vehicle sales volume for the Philippines’ operation declined by 34% year-on-year (YoY) as excise duty hikes from January 2018, continue to dampen demand for motor vehicles,” it stated in a research note yesterday.
The investment bank has put a target price (TP) of RM2.80 pegged to 13x FY20 earnings per share on the Mazda distributor as it expects better margins on the upcoming facelift of the Mazda CX-5 and other new car models.
AllianceDBS Research said Bermaz’s recent first quarter earnings came in within expectations.
“Overall, we expect FY20 sales volume to normalise as we think it would be challenging for Bermaz to replicate last year’s strong performance mainly due to the absence of the tax holiday period,” it noted.
It added that earnings surprise may come from better sales of new models, which are contributions from its associates, mainly Mazda Malaysia Sdn Bhd (MMSB).
AllianceDBS has a TP of RM2.85, pegged at 14.5x calendar year 2020 price earnings multiple, in light of Bermaz’s solid margins, minimal capital expenditure and robust balance sheet.
Last Friday, Bermaz’s posted a 1% YoY rise in net profit to RM50.5 million for the first quarter ended July 31, 2019 (1QFY20), against RM50.2 million profit recorded in 1QFY19 due to higher revenue registered during the period.
Revenue for the quarter increased to RM535 million from RM485 million reported in 1QFY19, fuelled by sales contribution from the group’s promotion to clear Mazda CX-5 inventories in preparation for the upcoming facelift model which is expected to be launched this month.
Bermaz noted that revenue contribution from its Philippine operation was lower as sales continued to be impacted by the rising vehicle cost and intense competition following the implementation of the Tax Reform for Acceleration and Inclusion law in January last year.
“No unit sales were recorded for the Mazda 3 and Mazda CX-3 models during the quarter under review due to supply constraint from Mazda Japan for the new Mazda 3 and the facelift model Mazda CX-3 during the current quarter,” it said in a statement to Bursa Malaysia last Friday.
As for its associate MMSB, its pre-tax profit decreased marginally by RM2.2 million or 3.3% due to the reduction in gross profit margin following the clearance inventories sales of the Mazda CX-5 model.
The strengthening of the Japanese yen against the Malaysian ringgit and Philippine peso has also affected the group’s gross profit margin.
“The group has also accounted for the expenses related to the group’s employees’ share scheme that was established in November 2018, amounting to RM1.2 million in the quarter under review,” it said.
On its outlook, the group is optimistic that the launch of the new Mazda CX-8 and Mazda CX-30 models and the new facelift of the ever popular Mazda CX-5 model — which includes the 2.5L Turbo variant in Malaysia — in the second half of the year will drive its earnings.
As for Bermaz Philippines, it seeks to improve its revenue and profitability by further strengthening its brand equity in tandem with sustainable dealers support and the forthcoming launch of the new and facelift models.
Bermaz’s share closed three sen lower at RM2.36, valuing the automotive company at RM2.75 billion.
The company has declared an interim dividend of 3.25 sen for the period, to be paid on Oct 25, 2019.
Bermaz and its subsidiaries are engaged in the distribution and retailing of Mazda vehicles as well as in providing after-sales services for Mazda vehicles in Malaysia and the Philippines.