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PETALING JAYA: Bermaz Auto Bhd (BAuto) is expected to launch more high-margin vehicles, especially sports-utility vehicles (SUVs) and electric cars which may drive earnings growth.
The auto distributor recently launched its all-new Mazda CX-8, a completely-knocked-down (CKD) model that is expected to further intensify the current backlog orders.
Amid rising inflation, Kenanga Research believes Mazda CX-8’s higher pricing point at RM3,000 is to safeguard BAuto’s margin due to an increase in operational cost.
“The Mazda CX-8 accounted for as high as 15% and 30% of BAuto’s total unit sales and revenue, respectively,” it said in a report.
“Mazda’s current backlog orders is at 10,000 units, to be fulfilled by the first quarter of next year, further cementing its high profit margin position without the need to fork out additional cost to absorb sales and service tax for orders before June 30, 2022,” it added.
Both 30%-owned Mazda Malaysia Sdn Bhd and 29%-owned Inokom Corp Bhd, the associates of BAuto, are expected to boost capacity, capitalising on the exciting new CKD launches including the CX-8 for the export market.
Kenanga Research expects both plant utilisation rate to rise above 50% over the next three quarters, compared with a 30% utilisation rate in the financial year 2021, especially with the expected arrival of automotive parts following the recent reopening of Shanghai Port.
According to the research house, there is growing demand for SUVs and electric vehicles (EVs), which are seeing rising awareness as the global EV volume increased by 120% in 2021.
“In response to the EV niche market demand, BAuto launched the all-new MX-30 EV completely-built-up units (CBU) and all-new KIA EV-6 GT-Line AWD CBU with limited units for the first batch to test the response for a larger CBU volume or a shift towards CKD production,” it said.
It added that on average, CKD margin is higher by 5% over CBU.
BAuto has the highest profit after tax (PAT) margin among automakers, commanding an average of 8% compared to the average PAT margin of both local and Japanese peers at 5%, according to Kenanga Research.
The research house favours BAuto as it offers the highest number of high-margin new launches and the highest profit after tax and minority interest margin, which is head and shoulders compared to its peers.
It reiterates its “outperform” call on BAuto with a target price of RM2.30 per share.