PETALING JAYA: Bermaz Auto Bhd ’s (BAuto) earnings are anticipated to come under pressure amid the surging competitive environment.
Hong Leong Investment Bank (HLIB) Research expects BAuto’s earnings to normalise lower in subsequent quarters, in line with the industry’s downward trend and increasing competitive environment, especially with the emergence of Chinese original equipment manufacturers (OEMs).
“We expect Malaysia’s total industry volume (TIV) to slow down in 2024 following the record high base of 800,000 units achieved in 2023, alongside heightened competition with the entrance of new Chinese OEMs with aggressive pricing and marketing strategies.
“On a more positive note, BAuto has secured the exclusive distributorship for China-based XPeng electric vehicle (EV) in Malaysia with the starting model G6, to be launched in August this year.
“The Philippines market continues to recover post-pandemic and BAuto is expected to leverage onto the recovery – the newly launched CX-60 and CX-90 premium models have been well received there,” the research house added.
For the fourth quarter ended April 30, 2024, the company recorded a lower net profit of RM90.22mil compared with RM100.62mil in the same quarter a year ago.
Revenue for the quarter also decreased to RM937.5mil compared with RM1.072bil achieved in the similar quarter in 2023.
Meanwhile, for its full year, BAuto chalked up a higher revenue of RM3.93bil compared with RM3.54bil in the preceding financial year. Its net profit came in higher at RM351mil for the year compared with RM306mil previously.
The board also declared a fourth interim dividend of 4.75 sen per share and a special dividend of seven sen single-tier dividend per share, which will be payable on Aug 2, 2024.
AmInvestment Bank Research, which is maintaining its “buy” call on BAuto with an unchanged fair value of RM3.42 per share, said the company’s balance sheet remains solid with a net cash of RM368mil.
“Our positive outlook on the company is premised on its impressive new model pipeline, strong brand franchise with a highly loyal clientele, clean balance sheet with industry-leading return on equity, as well as the the stock which currently trades at 9.2 times its financial year 2025 price-earnings, which is at a 23% discount to its five-year historical average,” the research house added.