HLIB Research starts coverage on Bermaz, target price RM2.70

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KUALA LUMPUR (Nov 14): Hong Leong IB Research has initiated coverage on Bermaz Auto Bhd with a “Buy” rating at RM1.98 and target price of RM2.70 based on 14x P/E CY20.

In a note today, the research house said it expects Bermaz to enjoy strong earnings CAGR growth of +27.7% for FY04/19-21, driven by strong demand for Mazda models in Malaysia, higher production volume for MMSB (for both domestic and regional ASEAN export market) and recovery in the Philippines (FY04/20-21).

“Bermaz is also in a net cash position of RM345.5 million (29.7sen/share) with projected free cash-flow of RM150 million-RM230 million par annum, supporting Bermaz’s sustainable dividend payout of 15-19sen/share, translating into attractive 7.5-9.5% dividend yield,” it said.