KUALA LUMPUR (Sept 4): Maybank IB Research has maintained its "buy" rating on Berjaya Auto Bhd (BAuto) at RM2.68 with a revised target price of RM3.50, saying the company’s 1QFY4/15 results, to be announced next week, are likely to beat consensus expectations.
In a note Thursday, the research house says it expects BAuto to report solid net profit of RM55 million-RM65 million (up 3%-22% q-o-q) on the back of stronger-than- expected vehicle sales in Malaysia (up 26% q-o-q) and the Philippines (up 45% q-o-q), and margin expansion on better sales mix (strong demand for its Mazda3, CX-5 2.5L and Biante) and favourable forex.
Maybank IB said year-to-date, ringgit/Japanese Yen averaged RM3.13/JPY100 versus house forecast of RM3.17/JPY100 for FY4/15.
“We raise FY15/16 earnings forecasts by 21%/20% after accounting for higher total vehicle sales (domestic and the Philippines) to 18k/22.5k units (+9%/+15% from 16,500/19,500 units previously) and operating margin expansion by about 1.6 percentage points on better sales mix (i.e. higher sales of CX-5 2.5L CBU) and stronger ringgit.
“We now assume an average of RM3.13/JPY100 for FY4/15. BAuto is our 'Top Pick' within the auto space for its strong earnings trajectory (32% 2-year net earnings CAGR) driven by its strong new launches pipeline with operating margins sustaining at circa 12%,” it said.
Maybank IB said with net cash of RM186 million (about 23 sen per share) as at end-Apr 2014 and little capex requirement, additional dividend payments in the near future could not be ruled out.
“Currently, we assume a 30% dividend payout ratio. We are also thrilled by its 60%-owned BAP operations, as it rides on the Philippines’ TIV demand (up 32% y-o-y in 7M14).
“The overseas outfit accounted for 7% of group EBIT in FY4/14,” it said.