BJAUTO (5248) : Berjaya Auto - Outsprinting competition
Target RM4.44 (Stock Rating: ADD)
BAuto’s 1HFY4/15 core net profit made up 53.0% of our full-year forecast and 53.5% of consensus. We deem this to be broadly in line, as we expect a weaker 2HFY4/15 due to the expected increased competition towards end-2014 and an overall slowdown in the industry in 2015, although we still expect BAuto to outperform its competitors and the industry. A second interim dividend of 3.25 sen per share was declared, as expected. We make no changes to our EPS forecasts and our target price, which is derived from 14.0x CY16 P/E, attaching a 10% premium over its peers’ P/E average, due to its relatively higher growth trajectory. We reiterate our Add recommendation on the stock, which remains our top pick for the sector. Higher-than-expected sales volume growth and the introduction of new models are potential rerating catalysts.
Net earnings more than doubled
Berjaya Auto (BAuto) recorded a highly satisfactory 1HFY4/15, with its core net profit surging 111.6% yoy to RM113.6m. The impressive performance was attributed mainly to the good demand for the popular Mazda SKYACTIV models, which led to higher sales volumes for Mazda vehicles in both Malaysia and the Philippines. In Malaysia, Mazda’s volume growth was mainly driven by the CX-5 (CKD and CBU) models, which is Mazda’s best-selling model in Malaysia, as well as other SKYACTIV models, namely the Mazda 3 and Biante. In the Philippines, Mazda’s sales volume growth was contributed mainly by the strong performance of its Mazda 2 and Mazda 3 models.
Consistent dividend play
BAuto has declared a second interim single-tier dividend of 3.25 sen per share. With its strong cashflow and low capex requirements, we believe that BAuto will continue to reward its shareholders with consistent dividend payments, with the payout ratio expected to be maintained at around 40% of net profit.
More new models to sustain growth
We anticipate a more challenging 2HFY4/15 as we expect all major auto makers to step up their promotional activities and aggressive campaigns to gain market share, compounded by the uncertainties of the effects of the GST on local car prices. Nonetheless, we expect BAuto to outperform its peers, with the anticipated introduction of the all-new Mazda 2 CBU and Mazda 3 CKD models, which are expected to hit the local market in 1QCY15.
Source: CIMB Daybreak - 09 December 2014
Target RM4.44 (Stock Rating: ADD)
BAuto’s 1HFY4/15 core net profit made up 53.0% of our full-year forecast and 53.5% of consensus. We deem this to be broadly in line, as we expect a weaker 2HFY4/15 due to the expected increased competition towards end-2014 and an overall slowdown in the industry in 2015, although we still expect BAuto to outperform its competitors and the industry. A second interim dividend of 3.25 sen per share was declared, as expected. We make no changes to our EPS forecasts and our target price, which is derived from 14.0x CY16 P/E, attaching a 10% premium over its peers’ P/E average, due to its relatively higher growth trajectory. We reiterate our Add recommendation on the stock, which remains our top pick for the sector. Higher-than-expected sales volume growth and the introduction of new models are potential rerating catalysts.
Net earnings more than doubled
Berjaya Auto (BAuto) recorded a highly satisfactory 1HFY4/15, with its core net profit surging 111.6% yoy to RM113.6m. The impressive performance was attributed mainly to the good demand for the popular Mazda SKYACTIV models, which led to higher sales volumes for Mazda vehicles in both Malaysia and the Philippines. In Malaysia, Mazda’s volume growth was mainly driven by the CX-5 (CKD and CBU) models, which is Mazda’s best-selling model in Malaysia, as well as other SKYACTIV models, namely the Mazda 3 and Biante. In the Philippines, Mazda’s sales volume growth was contributed mainly by the strong performance of its Mazda 2 and Mazda 3 models.
Consistent dividend play
BAuto has declared a second interim single-tier dividend of 3.25 sen per share. With its strong cashflow and low capex requirements, we believe that BAuto will continue to reward its shareholders with consistent dividend payments, with the payout ratio expected to be maintained at around 40% of net profit.
More new models to sustain growth
We anticipate a more challenging 2HFY4/15 as we expect all major auto makers to step up their promotional activities and aggressive campaigns to gain market share, compounded by the uncertainties of the effects of the GST on local car prices. Nonetheless, we expect BAuto to outperform its peers, with the anticipated introduction of the all-new Mazda 2 CBU and Mazda 3 CKD models, which are expected to hit the local market in 1QCY15.
Source: CIMB Daybreak - 09 December 2014
