Bermaz Auto falls 14.87% as 3Q net profit slumps 67%

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KUALA LUMPUR (March 17): Shares in Mazda distributor Bermaz Auto Bhd (BAuto) fell 14.87% in early trade today after its net profit slump 66.5% to RM27.15 million for the third quarter ended Jan 31, 2020 (3QFY20) largely due to lower profit contribution from domestic operations and lower share of profit contribution from its associate company, Mazda Malaysia Sdn Bhd (MMSB).

At 9.13am, B Auto lost 22 sen to RM1.26, for a market capitalisation of RM1.47 billion.

Quarterly revenue shrunk nearly 40% to RM467.46 million versus RM778.13 million a year ago, due to lower sales volume from domestic and the Philippine operations. The group declared a third interim single-tier dividend of 1.45 sen per share, payable on May 28.

Meanwhile, PublicInvest Research downgraded BAuto to “Neutral” at RM1.48 with a lower target price (TP) of RM1.59 (from RM2.51) and said BAuto recorded lower net profit of RM27.1 million in 3QFY20 (-66% y-o-y), weighed by lower sales volume from both its domestic and Philippine operations.

In a note today, the research house said excluding one-off expenses relating to the group’s Employees’ Share Scheme of RM3.1 million, cumulative 9MFY20 net profit of RM101.2 million was below expectations at 54% and 57% of our and consensus’ full year estimates respectively.

“The discrepancy was mainly due to lower margins on the new Mazda CX-5 facelift model, compelled by the current market sentiment.

“We adjust downwards our earnings forecast by an average of 33% for FY20-22F to account for higher costs.

“We also downgrade our call on BAuto to Neutral, with a lower target price of RM1.59 (previous TP of RM2.51), based on 13x FY21F EPS,” it said.