KUALA LUMPUR (March 13): Bermaz Auto Bhd’s (KL:BAUTO) stock fell on Thursday and headed towards a three-year low after the car assembler reported weaker-than-expected quarterly profits.
Core net profit for the nine months ended Jan 31, 2025 only accounted for 62% of consensus’ full-year forecast, sending analysts scrambling to cut their earnings forecasts and target prices. At least three downgraded their recommendations for the stock.
The rest of the financial year “will be challenging due to increasing competition from Chinese-made vehicles, which offer competitive pricing and advanced connectivity features,” said TA Securities in lowering its call on Bermaz Auto to a “sell” from “buy” previously.
Shares of Bermaz Auto fell nearly 5% or five sen to 99 sen, bucking broader rebound in a market heavily-sold down over the past few days. The stock eased off lows and was trading at RM1.00 at 9.20am after more than two million shares changed hands.
“Hold” and “sell” calls together now outnumber ‘buy’ recommendations, according to 15 analysts tracked by Bloomberg. Bermaz Auto’s average 12-month target price has also fallen sharply to RM1.28 from RM1.95 a week ago.
Once a darling automotive stock for its strong dividend payouts, shares of Bermaz Auto that mainly assembles Mazda-branded vehicles have shed more than 40% of their value since December 2024, as Chinese manufacturers entered the market in droves and ate into its market share.
While new vehicle sales in Malaysia rose by 2% last year, Mazda’s sales volume contracted by 24%, data from the Malaysian Automotive Association (MAA) showed. In contrast, Chinese brands Chery and BYD saw the strongest growth, together capturing 3.5% of market share versus 1% in 2023.
For CIMB Securities, the lack of exciting new launches for its key Mazda brand in Malaysia also adds to Bermaz Auto’s challenges this year.
While volume may recover in the next year driven by the upcoming launch of the CX-60 and CX-80 sport utility vehicles, the rebound could come at the expense of margins due to intensifying competition for its flagship CX-5 and CX-30 models in the RM100,000–200,000 segment, the research house flagged.
Still, CIMB Securities kept the stock on a “hold” call, citing attractive 8.7%–9.6% yields in the next two financial years, backed by a healthy net cash position of RM245 million.
On Wednesday, Bermaz Auto reported that its net profit in the third quarter ended Jan 31, 2025 declined 66% year-on-year to RM24.14 million. Revenue for the quarter declined 32.8% year-on-year to RM602.08 million, its weakest since 2QFY2022.