Bermaz Auto drives on confidently
Mazda distributor expects good financial results to continue into its fiscal Q4
BERMAZ Auto Bhd (BAuto) recorded a stellar earnings growth in its third quarter ended Jan 31, 2018, a commendable feat considering the challenging automotive market at the moment.
The company, which is the official distributor of Mazda cars in Malaysia, registered a 61.2% growth in net profit to RM40.47mil for its third quarter, compared with the corresponding quarter last year.
This was achieved on the back of increased sales volume of the new Mazda CX-5 model and a higher share of profit contribution from 30%-owned Mazda Malaysia (MMSB).
The question now is, can the company maintain its performance going into the fourth quarter and into the next financial year?
BAuto chief executive officer Datuk Seri Ben Yeoh is confident that this is an achievable feat for the company.
“The fourth quarter performance will be quite similar to the third quarter results.
“This is as a result of the new Mazda CX-5 which is gaining popularity in the domestic market,” he tells StarBizweek in an e-mail.
“Also, the favourable foreign exchange (forex) rate of the yen to the ringgit provides better margins for our completely-built-up (CBU) imports, especially the new CX-9,” says Yeoh.
He adds that MMSB will also benefit from the better forex, as a high percentage of the company’s cost is yen-based.
“This fourth quarter contribution from MMSB will be good as exports of CX-5 continues without hitches.
“Contribution from subsidiary company BAuto Philippines (BAP) will be slightly lower as a result of lower volume sales in the fourth quarter.
“Overall, we are confident that our fourth quarter results will be similar to the third quarter,” Yeoh says.
Maybank Investment Bank Research (Maybank IB) also says it expects a stronger fourth quarter for BAuto to close the year.
“In the third quarter, BAuto booked in MMSB’s earnings for October to December 2017, whereby 5,084 units were produced in the quarter.
January 2018 alone saw Mazda production surge to a record high of 3,060 units.
“As such, we believe that associates could anchor BAuto’s quarter-on-quarter growth in the fourth quarter of 2018 earnings. For financial year 2019, we forecast 76% year-onyear earnings growth, which is premised on volume growth, coming from new CX-5 and CX-8 models, as well as stabilisation of the yen to the ringgit.”
Going into the 2018/2019 financial year, Yeoh says the new CX-5 will be the volume driver, with CBU products mainly being the M2, CX-3 and CX-9.
“Domestic sales volume will be approximately 13,000 units with BAP forecasting 5,000 units.
“If forex continues to be at this level, then the overall company’s performance would be similar or slightly better then this 2017/2018 financial year,” it said.
For 2018, Yeoh says BAuto is targeting to sell 12,000 units in Malaysia.
“BAuto’s sales volume philosophy is basically natural organic growth focusing on giving customers a good ownership experience and good value. That can be seen in the products that we offer.
“These include green technology and driver/passenger-centric safety features.
“Ownership cost is low with our free maintenance packages.
‘We’re always striving to meet growing customer expectations to improve customer retention.”
BAuto reported a 65.2% year-on-year increase in revenue to RM559.4mil in the third quarter, mainly due to improvement in sales volume in both the domestic and the Philippines operations arising from the well-received response to the new CX-5 and CX-9 models launched in October and November 2017, respectively.
This brings the group’s nine-month cumulative revenue and net profit to RM1.42bil and RM82.88mil, respectively.
On the company’s outlook going forward, PublicInvest Research says it expects BAuto to continue to benefit from higher demand for the new CX-5 model. “Meanwhile, the commencement of export of the new CX-5 model to Thailand, Indonesia, Philippines and Cambodia is expected to drive up the profitability of its associate, MMSB,” it says.
Kenanga Research concurs, believing that the company’s sales for the rest of the year will be driven by Mazda CX-5 completely-knocked-down units (currently at 3,199 units since launch); while supported by the Mazda G-Vectoring (GVC) variants of Mazda 3, 6, CX-3 and CX-9.
“For calendar year 2018, BAuto is looking to bring in the Mazda CX-8 and the all-new 2018 Mazda 6 CBU; while for 2019, BAuto is expected to introduce a new generation of its flagship models of Mazda 3,” it says.