KUALA LUMPUR: CIMB Securities Sdn Bhd has revised downwards its earnings forecasts for Bermaz Auto Bhd (BAuto) by 12-24 per cent for financial year 2025 (FY25)-FY27 to reflect a lower sales volume assumption, particularly for Mazda.
CIMB Securities expects Mazda sales volume in Malaysia to decline by 19 per cent year-on-year (YoY) to 15,000 units.
"However, we still expect Kia sales volume to grow in FY4/25F, albeit at a slower rate, driven by the upcoming launch of the Kia Sportage.
"The group recently opened booking registrations for the Kia Sportage and plans to launch the locally assembled vehicle in January 2025.
"We estimate the pricing for the new Sportage to range between RM147,000 and RM187,000," it said in a note.
CIMB Securities also expects Kia Sportage to become a new volume driver for BAuto in FY26.
"We project Kia sales volume to grow from 1,900 units in FY24 to 2,600/4,000/4,500 units in FY25/26/27, respectively."
BAuto's second quarter core net profit fell 55 per cent YoY, primarily due to lower sales volumes for its Mazda and Kia marque domestic operations, impacted by intensifying competition in the automotive industry, especially with the entry of new Chinese players.
Mazda and Kia sales volumes declined by 39 per cent and 55 per cent YoY, respectively.
Despite the weaker earnings, BAuto declared a total dividend of 10 sen for the quarter, consisting of a three sen second interim dividend and a seven sen special dividend.
"According to BAuto, the special dividend was largely attributed to a special payout from its 30 per cent-owned associate, Mazda Malaysia Sdn Bhd."
The firm previously estimated that Mazda Malaysia was considering a special dividend of RM200–RM300 million.
This is given its minimal capital expenditure requirements and strong financial position, with RM668 million in cash reserves and no borrowings as of the fiscal year-end in March 2024.
"Therefore, we view the special dividend payout from Mazda Malaysia as a positive catalyst for the stock.
"Overall, BAuto declared a higher 13.5 sen dividend in the first half of FY24 (1HFY24), compared with the 10 sen dividend in 1HFY23."
Post-earnings revision, CIMB Securities downgraded its rating on BAuto to 'Hold' with a lower target price of RM2.10 versus RM2.90 previously.