1QFY4/15 earnings within our forecast but above Street’s. Declared a 2sen interim dividend to go ex on 23 Sep.
Near-term catalysts are favourable: forex, new model launches and production capacity expansion.
Reiterate BUY with unchanged Street-high TP of MYR3.50 (12x CY15 PER), offering 21% upside.
QoQ improvement was due to: (i) stronger-than-consensus’ vehicle sales expectation in Malaysia (+26% QoQ) and the Philippines (+45% QoQ) and (ii) margin expansion on better sales mix (strong demand for its Mazda3, CX-5 2.5L and Biante) and favourable forex. YTD FY4/15 (May-August 2014) MYR/JPY averaged MYR3.13/JPY100 vs an effective rate of MYR3.22/JPY100 for FY4/14.
Following its successful foray in the Philippines, BAuto now eyes a partnership with a local player for distribution of Mazda vehicles in Indonesia. A successful foray into this market will widen BAuto's earnings base and warrant a further re-rating. Risk/reward ratio remains compelling. Reiterate BUY.
Source: Maybank Research - 9 Sep 2014
Near-term catalysts are favourable: forex, new model launches and production capacity expansion.
Reiterate BUY with unchanged Street-high TP of MYR3.50 (12x CY15 PER), offering 21% upside.
What’s New
1QFY4/15 core net profit of MYR60m (+12% QoQ, +139% YoY) accounted for 28%/31% of our/consensus full-year forecasts, in line with our expectations having considered a seasonally stronger Hari Raya sales. Headline net profit of MYR56m included ESOS charge, forex loss and derivatives loss amounting to MYR4m.QoQ improvement was due to: (i) stronger-than-consensus’ vehicle sales expectation in Malaysia (+26% QoQ) and the Philippines (+45% QoQ) and (ii) margin expansion on better sales mix (strong demand for its Mazda3, CX-5 2.5L and Biante) and favourable forex. YTD FY4/15 (May-August 2014) MYR/JPY averaged MYR3.13/JPY100 vs an effective rate of MYR3.22/JPY100 for FY4/14.
What’s Our View
Our forecasts are unchanged. BAuto remains our Top Pick within the auto space for its strong earnings trajectory (32% 2-year net earnings CAGR) driven by its strong new launches pipeline and capacity expansion. We also see potential near-term boosts to earnings from: (i) fast-growing TIVs in the Philippines (+26% YoY in 7M14) and (ii) favourable forex. MYR/JPY currently trades at MYR3.02/JPY100 vs our assumption of MYR3.13/JPY100 for FY4/15.Following its successful foray in the Philippines, BAuto now eyes a partnership with a local player for distribution of Mazda vehicles in Indonesia. A successful foray into this market will widen BAuto's earnings base and warrant a further re-rating. Risk/reward ratio remains compelling. Reiterate BUY.
Source: Maybank Research - 9 Sep 2014
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