PETALING JAYA: Berjaya Auto Bhd’s (BAuto) Mazda vehicle sales are expected to increase to over 15,000 units in the financial year 2015 (FY15) and over 18,000 units in FY16, said MIDF Research.
Mazda vehicle sales are expected to be driven by new model launches and introduction of completely knocked-down (CKD) models.
The CKD variants command lower prices than the completely built-up (CBU) models due to localisation of certain parts which reduces the effective excise duty incurred.
MIDF Research expects the group’s FY15 revenue to grow by 41% to RM2bil and a further 14% growth to RM2.3bil in FY16.
Unlike its peers, BAuto operates an asset-light business model, with only seven outlets out of the entire network of 78 sales outlet in Malaysia.
In the Philippines, BAuto is only limited to being the exclusive distributor of Mazda vehicles which garners better margin.
“(BAuto) Having an asset-light business model translates into efficient capital structure, good earnings quality and strong earnings growth,” said MIDF Research in an initiate coverage statement yesterday.
As a result of the group’s asset-light business model, BAuto generated strong return on equity of over 50% and return on invested capital of 80% in FY14.
The research house expects these returns to remain at healthy levels in subsequent years, driven by higher net margin and asset turnover.
“We expect BAuto’s earnings to continue to post robust growth of 75% in FY15 to RM225mil before it eases to 14% in FY16 to RM258mil,” said MIDF Research.
Besides, BAuto is indirectly exposed to the yen via Prima Merdu, the approved permit holder, and MMSB, a joint-venture company, for the purchases of CBU units and CKD parts from Mazda Japan.
It was guided that for every 10 sen change in the ringgit/100 yen exchange rate, BAuto’s earnings would be impacted by about RM4.5mil to RM5mil.
“In our model, we have assumed average rate of RM3.05/100 yen for FY15 before increasing to RM3.08/100 yen in FY16 to reflect current volatility, in tandem with the depressed crude oil prices,” said MIDF Research.
Moving forward, the research house expects BAuto’s earnings to grow at a 41% compound annual growth rate over FY14 to FY16 while net margin to expand further to as high as 11.1%.
Keyword: Mazda sales set to increase