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KUALA LUMPUR: Affin Hwang Capital research expects Bermaz Auto Bhd

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's sales volume to moderate in FY20 due to competition for the Mazda CX-5 from the all-new Proton X70.

"We cut our FY21-22E EPS by 10-13% after lowering our sales forecasts and EBITDA margin assumptions to 12% (previously 12-14%).

"In tandem, we downgrade Bauto to HOLD (from Buy) with a lower 12-month TP of RM2.60 (from RM3.20) based on a 12x CY20E PER (3-year mean fwd. PER; from 14x) as we have turned cautious on Mazda’s near-term sales volume," it said in a note.

The research house expects the automaker's sales volume to dip 11% year-on-year (y-o-y) from its high of 19,000 units in FY19 due to lower take-up for the Mazda CX-5.

It added that Bermaz's new model launches over the medium, which include the Mazda 3, all-new Mazda CX-8, refreshed CX-5 2.5L turbro and all-new CX-30 are unlikely to outperform that of the CX-5 due to higher price points against their peers.

On a positive note, the research house said a mild recovery for its 60.4%-owned Bermaz Auto Philippines is expected to cusion the negative impact.

For 6M19, the Philippines unit's industry sales ended 1.5% higher y-o-y at 174,000 units.

Moving forward, Bermaz is targeting a third SUV localisation programme after the CX-5 and CX-8, which will require the automaker and its partners to invest about RM200mil to upgrade the Inokom production facility, increasing its capacity to 50,000 units per annum from 30,000 units currently.
Read more at https://www.thestar.com.my/business/business-news/2019/07/19/affin-hwang-downgrades-bermaz-auto-on-expectatons-of-lower-sales-volume/#aPl3er1L1gbspGwa.99

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