KUALA LUMPUR (Nov 28): Berjaya Auto Bhd., the distributor and assembler for Mazda Motor Corp. vehicles in Malaysia, plans to raise dividends this year and double sales within three years with new models. The stock rose the most in two weeks.
The company, which has about 229 million ringgit ($68 million) of cash, will pay higher dividends tied to the quarter ended October, Francis Lee, a director at Berjaya Auto, said in an interview yesterday. Sales will be bolstered by four main models, with the Mazda 2 to be offered in January, he said.
Berjaya Auto plans to introduce newer models as it seeks to more than double its share of Malaysia’s market for foreign car brands in three years to as much as 7 percent, he said. The stock has rallied 103 percent in 2014, outperforming rivals Tan Chong Motor Holdings Bhd. and DRB-Hicom Bhd., which have tumbled at least 33 percent.
“This quarter we will pay something more,” Lee said in Kuala Lumpur. “We are only touching the surface” he said, referring to the company’s sales potential in Malaysia.
Berjaya Auto jumped 4.7 percent at the close, while the FTSE Bursa Malaysia KLCI Index fell 0.7 percent. Tan Chong, the assembler of vehicles for Nissan Motor Co., lost 3.2 percent.
“My first quarter I paid 2 sen per share,” Lee said. “Going forward, I will be paying a quarterly dividend and this is unheard of for motor companies to pay a quarterly dividend.”
Yen Beneficiary
The company is also benefiting from the weaker yen as the cost of its imported cars and parts drop, which will widen profit margins, Lee said.
“Berjaya Auto is the main beneficiary of the weaker yen compared to other players,” he said. For every 10 sen the ringgit appreciates against the yen, an additional 4 million ringgit to 5 million ringgit will flow into the company’s profit, he said. The ringgit has strengthened 6.4 percent versus the yen in the past three months.
The shares are valued at 11.1 times 12-month projected earnings, compared with 15.9 for the benchmark KLCI, data compiled by Bloomberg show. The company is estimated to post a 62 percent surge for its fiscal year ending April 2015, according to five analysts in a Bloomberg survey.
“The company is our top pick in the auto sector,” Alexander Chia, head of the RHB Research Institute, said by phone. “Berjaya Auto has a strong pipeline of new products.”
Berjaya Corp., the controlling shareholder of the company, sold 60 million shares to investors on Nov. 25, cutting its stake to 36.7 percent. Lee, who owns 660,000 shares, said the sale will provide more liquidity to the stock.
The company plans to acquire a 20 percent stake in a vehicle assembly plant owned by Inokom Corp. Sdn. for 30 million ringgit ($8.96 million) in the next “few weeks”, Lee said.
The plant assembles vehicles for companies including Berjaya Auto’s 30-percent associate unit, Mazda Malaysia Sdn. The company is also considering building a new paintshop with Japan’s Mazda and Sime Darby Bhd., Lee said.