KUALA LUMPUR (Feb 4): Chinese carmakers are eating the market share of Bermaz Auto Bhd (KL:BAUTO), which mainly assembles Mazda-branded vehicles, with aggressive price discounting, CGS International flagged.
Even after adding sales of electric vehicles from Xpeng and Deepal, CGS International is cutting its earnings forecasts for Bermaz Auto by as much as 26% for the financial year ending April 30, 2025 (FY2025) to FY2027, due to the intense competition.
“We believe Mazda’s car sales in Malaysia will continue to face competitive challenges in the near term,” the research house said in a note.
While new vehicle sales in Malaysia rose by 2% last year, Mazda’s sales volume contracted by 24%, according to the Malaysian Automotive Association. In contrast, Chinese brands Chery and BYD saw the strongest growth, together capturing 3.5% of the market share versus 1% in 2023.
The Mazda CX-5, the brand's bestselling model in Malaysia, is sold at a price range of RM145,000-RM195,000, slightly above that of many of the new entrants’ top-selling models.
Shares of Bermaz Auto have declined sharply, down more than 30% since December, amid investors’ concerns over the heightened competition. Analysts have turned less bullish on the stock, cutting target prices in recent weeks.
There are now eight ‘buy’, six ‘hold’, and one ‘sell’ calls among the research houses, with the consensus target price falling by more than 25% from the start of December to RM2.05 currently, according to Bloomberg. The street’s estimates for core net profit currently stand at RM230.5 million for FY2025.
Nevertheless, CGS International is betting that Bermaz Auto’s overall sales volume would improve from July, underpinned by the launch of the new Xpeng G9, and the introduction of three electric vehicle models from Deepal.
Bermaz Auto will also be launching the new Mazda CX60 in March to June, and CX-80 in July to September, while the Xpeng G6, which was launched in Malaysia late last year, is currently selling about 120 units per month, the research house noted.
The house cut its target price by 80 sen to RM2.30, but maintained its ‘add’ call, as “we expect earnings improvements, especially from FY2026 onwards, underpinned by more line-ups”.
Further, current valuations look “undemanding”, supported by strong dividend yields of about 10%, CGS International added.
Bermaz Auto shares last traded at RM1.30 on Bursa Malaysia, giving the company a market capitalisation of about RM1.5 billion.