PublicInvest downgrades Bermaz Auto, lowers target price to RM1.59

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KUALA LUMPUR (March 17): PublicInvest Research has downgraded Bermaz Auto Bhd (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.