KUALA LUMPUR (Sept 12): Analysts remain upbeat on Bermaz Auto Bhd’s (Bermaz) second half earnings, despite having registered a first quarter below expectations results yesterday. The company is expected to achieve a stronger second half with the launch of its all-new Mazda CX-5 SUV model, happening next month.

In a note today, RHB Research said although the company’s first quarter (1QFY18) earnings only reached 12% of FY18 forecasts, it considers the results to be in line with expectations and that the company is on track to achieve a much stronger 2HFY18, helped by the introduction of the new CX-5 in both domestic and export market.

“We understand that bookings for the new CX-5 have already exceeded 500 units, even before the official launch. Bookings are expected to gather pace in the coming weeks, when the sport utility vehicle (SUV) is made available for display in showrooms ahead of the official launch in October,” said RHB Research.

RHB reiterated its "Buy" call, with a target price of RM2.30.

Yesterday, Bermaz reported a net profit of RM20.21 million for its first quarter ended July 31, 2017 (1QFY18), representing a 50.85% drop, compared with its 1QFY17 net profit of RM41.11 million.

Revenue fell 20.74% to RM391.23 million, from RM493.62 million, which the company blames on lower domestic sales, particularly for the CX-5 Run-out model and ageing Mazda-3 model, which faced intense competition from new models launched by other comparable brands.

CIMB Research had increased its target price from RM2.15 to RM2.30 with an Add call, citing successful new model launches, higher dividend payouts and potential listing of the company’s Bermaz Auto Philippines as potential rerating catalysts.

The research house expects the average selling price for the new CX-5 to be 5% higher than the current model.

“Moreover, we learnt that the new CX-5 model would be a completely knocked down (CKD) version; this should help to boost its margin. The new CX-5 will also drive higher profit contribution for its associate, which are responsible for exporting the model across the region. CX-5 is key driver for Bermaz, accounting for 35% of its average annual sales volume in FY15-17,” CIMB Research said in a note yesterday.

Meanwhile, Public Investment Bank Research said it had lowered its estimates for FY17-FY19 by circa 17% to account for lower vehicle sales, in view of weak consumer sentiments. However, it concurred that the new vehicle would improve second half earnings.

“We maintain our Outperform call on BAuto, as we expect sales volume by BAuto to improve in 2HFY18 onwards, due to the launching of new CX-5 models,” PublicInvest Research said.

At 10.56am, Bermaz fell 1.87% or 4 sen to RM2.10, with 929,500 shares done.