Friday 29 Mar 2024
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KUALA LUMPUR (Sept 17): Hong Leong IB Research has maintained its “Buy” rating on Bermaz Auto Bhd at RM2.39 with a lower target price (TP) of RM2.85 (from RM3.08) and said Bermaz reported core PATMI of RM52.5 million for 1QFY20 (-13.7% QoQ; +5.1% YoY), below house expectation (20.3%) and consensus (21.1%), due to lower than expected sales volume and operating margins (on increased sales incentives and JPY appreciation).

In a note today, the research house said upcoming attractive launches of facelift CX-5, new CX-8 and new CX-30 are expected to sustain Bermaz sales volume in both Malaysia and Philippines markets.

Bermaz declared first interim dividend of 3.25sen/share (ex-date: 9 Oct 2019).

HLIB Research adjusted its earnings forecast for Bermaz lower by 14.1% for FY20 and 8.6% for FY21.

“We still retain our Buy recommendation with lower TP: RM2.85 (from RM3.08) based on 14x P/E CY20, as Bemaz’s balance sheet remained strong with net cash position of RM188.5 million (16.2sen/share) with projected free cash-flow of RM190-230 million per annum, supporting its sustainable dividend payout of 12.5-17.0sen/share, translating into attractive 5.2-7.1% dividend yield,” it said.

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