BJAUTO (5248) : Berjaya Auto - New models to drive growth
Target RM5.38 (Stock Rating: ADD)
Bucking the industry trend, BAuto continues to thrive in the increasingly competitive local auto industry, with its Philippines venture continuing to perform admirably. Our recent meeting with management strengthened our conviction that BAuto is on track to sustain its impressive growth rate, supported by exciting new models and increased localisation of its existing models. We continue to value the stock at 14.0x CY16 P/E, attaching a 10% premium over its peers’ average P/E in view of its higher growth trajectory. We reiterate our Add call on the stock, which is our top pick for the sector. The successful launch of its upcoming new models and higher-than-expected sales volume are potential re-rating catalysts.
What Happened
We had a meeting with the management of Berjaya Auto (BAuto) last week. Management reiterated that it is on schedule for its new model launches this year, namely the Mazda 2's launch in end-Jan 2015 and the CX-3's introduction slated for Jul 2015. On top of the new models, BAuto is also going to introduce the facelift version of its best-selling model, the CX-5. The preparation for the commencement of assembly of CKD models of the Mazda 3 and Mazda 6 is also on track, with the assembly testing of the Mazda 3 now underway. It is also excited about the growth prospects of its Philippines operations in 2015, supported by the robust sector growth in the country.
What We Think
Thanks to the new models and increased localisation of its existing models, we remain highly convinced that BAuto is on track to surpass its sales target for Malaysia of 12,000 units in FY15 and 16,000 units in FY16. We expect the new Mazda 2 to provide stiff competition to the existing models in the B-segment, while the new CX-3 compact SUV should at least replicate the huge success of the CX-5 model, due to the increasing popularity of compact SUVs. We are also positive on BAuto’s commitment to increase its CKD model line-up, as the more competitive pricing from increased localisation will enable Mazda to compete on a more level playing field with its competitors and provide a platform for more robust sales growth.
What You Should Do
Accumulate the stock to ride on BAuto’s exciting growth, which is our top pick for the sector. It has been consistently outperforming the industry growth rate in Malaysia and Philippines by far, and its growing net cash position offers potential for higher dividend payouts or expansion opportunities.
Source: CIMB Daybreak - 08 January 2015
Target RM5.38 (Stock Rating: ADD)
Bucking the industry trend, BAuto continues to thrive in the increasingly competitive local auto industry, with its Philippines venture continuing to perform admirably. Our recent meeting with management strengthened our conviction that BAuto is on track to sustain its impressive growth rate, supported by exciting new models and increased localisation of its existing models. We continue to value the stock at 14.0x CY16 P/E, attaching a 10% premium over its peers’ average P/E in view of its higher growth trajectory. We reiterate our Add call on the stock, which is our top pick for the sector. The successful launch of its upcoming new models and higher-than-expected sales volume are potential re-rating catalysts.
What Happened
We had a meeting with the management of Berjaya Auto (BAuto) last week. Management reiterated that it is on schedule for its new model launches this year, namely the Mazda 2's launch in end-Jan 2015 and the CX-3's introduction slated for Jul 2015. On top of the new models, BAuto is also going to introduce the facelift version of its best-selling model, the CX-5. The preparation for the commencement of assembly of CKD models of the Mazda 3 and Mazda 6 is also on track, with the assembly testing of the Mazda 3 now underway. It is also excited about the growth prospects of its Philippines operations in 2015, supported by the robust sector growth in the country.
What We Think
Thanks to the new models and increased localisation of its existing models, we remain highly convinced that BAuto is on track to surpass its sales target for Malaysia of 12,000 units in FY15 and 16,000 units in FY16. We expect the new Mazda 2 to provide stiff competition to the existing models in the B-segment, while the new CX-3 compact SUV should at least replicate the huge success of the CX-5 model, due to the increasing popularity of compact SUVs. We are also positive on BAuto’s commitment to increase its CKD model line-up, as the more competitive pricing from increased localisation will enable Mazda to compete on a more level playing field with its competitors and provide a platform for more robust sales growth.
What You Should Do
Accumulate the stock to ride on BAuto’s exciting growth, which is our top pick for the sector. It has been consistently outperforming the industry growth rate in Malaysia and Philippines by far, and its growing net cash position offers potential for higher dividend payouts or expansion opportunities.
Source: CIMB Daybreak - 08 January 2015
