Berjaya Auto seen to outperform its peers

by **Cals** Thu 12 Mar 2015, 00:53

Berjaya Auto seen to outperform its peers

By CIMB Research / CIMB Research | March 11, 2015 : 9:52 AM MYT

[size=14]Berjaya Auto Bhd ([You must be registered and logged in to see this image.] Financial Dashboard)
(March 10, RM3.64)
Reiterate add with target price of RM4.44: Berjaya Auto’s (BAuto) nine months ended Jan 31, 2015 for financial year 2014/2015 (9MFY4/15) core net profit surged 90.1% year-on-year (y-o-y) to RM160.1million, driven by a 33.4% y-o-y jump in revenue to RM1.4 billion. The highly impressive performance was mainly due to higher sales volumes of Mazda vehicles.

In Malaysia, the volume growth mainly came from the new Mazda 2 model (launched on Jan 22), Mazda CX-5 completely knocked-down (CKD) model, and the three new completely built-up models that were launched in 3QFY4/14, namely Mazda Biante, Mazda 3 and Mazda CX-5 (2.5L).

As for the Philippines, sales volume growth continued to be driven by Mazda 2 and Mazda 3 models.

BAuto continues to reward its shareholders with consistent dividends. Its 3.35 sen dividend per share brought its total declared dividends for FY15 to 8.60 sen per share, translating into a 43.4% payout ratio, and consistent with its 40% dividend policy.

And even with the consistent dividends and after its acquisition of a 20% stake in Inokom for RM30 million, BAuto still managed to increase its cash position to RM319 million from RM313 million as at the end of the first half of its 2015 financial year.

This strong cashflow is achievable due to the group’s asset-light policy and zero gearing.

We expect BAuto to continue to outperform its peers in the challenging domestic auto segment, with new models boosting growth.

Its recently-launched Mazda 2 has been a success, and it is on track to launch more new models this year, namely Mazda CX-3 (in July), Mazda 3 CKD (1Q15), Mazda CX-5 facelift (in April), and Mazda6 CKD (3Q15) — CIMB Research, March 9

This article first appeared in The Edge Financial Daily, on March 11, 2015.
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