Maybank Research retains Buy on Berjaya Auto
KUALA LUMPUR: Maybank Investment Bank Research is maintaining its Buy recommendation for Berjaya Auto (BAuto) with a higher target price of RM4.35 (up 24%).
It had on Tuesday the RM4.35 target price was pegged to higher CY15 PER target of 13 times (from 12 times) given its superior growth (37% three-year earnings CAGR) and low PEG of 0.4 times.
Maybank Research said the Japanese yen (JPY) weakened to a six-year low against the US dollar after Bank of Japan (BoJ) announced a massive ramp up of its stimulus programme last Friday.
Consequently, the ringgit strengthened to 2.93 to JPY100 vs RM3.12 per JPY100 at the start of the year and “we see BAuto as the prime beneficiary within our auto space, for all of its imported cost is denoted in JPY (60%-65% of COGS),” it said.
The research house said BAuto’s management had previously guided that they had hedged their position at RM3.09 to JPY100 for purchases from May 2014 to February 2015.
“As a result of the weaker yen outlook, we now impute a lower average of (i) RM3.07/JPY100 for purchases in FY4/15 and (ii) RM2.95/JPY100 for purchases in FY16-17 (from RM3.13/JPY100 previously).
“Correspondingly, our FY15/16/17 net profit is lifted by 11%/16%/17%. BAuto’s growth trajectory (37% three-year earnings CAGR) is on track and superior to its peers’ average three-year CAGR of 6%,” it said.
Maybank Research said valuations remained undemanding at 11 times CY15 PER and 0.4 times PEG, backed by 2+% yield. It said hence a higher PER target of 13 times (versus peers at 12 times PER target) is in fact justifiable.
“Other potential catalysts include: (i) stronger-than-expected demand for the soon-to-be-launched Mazda2 and Mazda3 CKD, (ii) surging TIV in the Philippines (+28% on-year in 8M14) and (iii) exclusive distributorship award for Mazda cars in Indonesia,” it said.
http://www.thestar.com.my
KUALA LUMPUR: Maybank Investment Bank Research is maintaining its Buy recommendation for Berjaya Auto (BAuto) with a higher target price of RM4.35 (up 24%).
It had on Tuesday the RM4.35 target price was pegged to higher CY15 PER target of 13 times (from 12 times) given its superior growth (37% three-year earnings CAGR) and low PEG of 0.4 times.
Maybank Research said the Japanese yen (JPY) weakened to a six-year low against the US dollar after Bank of Japan (BoJ) announced a massive ramp up of its stimulus programme last Friday.
Consequently, the ringgit strengthened to 2.93 to JPY100 vs RM3.12 per JPY100 at the start of the year and “we see BAuto as the prime beneficiary within our auto space, for all of its imported cost is denoted in JPY (60%-65% of COGS),” it said.
The research house said BAuto’s management had previously guided that they had hedged their position at RM3.09 to JPY100 for purchases from May 2014 to February 2015.
“As a result of the weaker yen outlook, we now impute a lower average of (i) RM3.07/JPY100 for purchases in FY4/15 and (ii) RM2.95/JPY100 for purchases in FY16-17 (from RM3.13/JPY100 previously).
“Correspondingly, our FY15/16/17 net profit is lifted by 11%/16%/17%. BAuto’s growth trajectory (37% three-year earnings CAGR) is on track and superior to its peers’ average three-year CAGR of 6%,” it said.
Maybank Research said valuations remained undemanding at 11 times CY15 PER and 0.4 times PEG, backed by 2+% yield. It said hence a higher PER target of 13 times (versus peers at 12 times PER target) is in fact justifiable.
“Other potential catalysts include: (i) stronger-than-expected demand for the soon-to-be-launched Mazda2 and Mazda3 CKD, (ii) surging TIV in the Philippines (+28% on-year in 8M14) and (iii) exclusive distributorship award for Mazda cars in Indonesia,” it said.
http://www.thestar.com.my
