TA Securities said the auto distributor’s “beyond expectation” financial performance has also prompted it to raise its target price from RM2.36 to RM2.48.
Bermaz Auto reported a RM100.22 million profit for the quarter ended July 31 (Q1 2024), up 99.8% from RM50.16 million in the previous corresponding quarter.
Revenue rose 51.9%, from RM716.87 million to RM1.09 billion.
TA Securities attributed the growth in revenue to the domestic sales of the Mazda marque, particularly the CX-30 completely knocked down (CKD) model which hit the Malaysian market in March.
It said the continued fulfilment of earlier orders for Mazda 3 also helped to boost revenue.
The research firm foresees continued strong sales momentum in the coming quarter due to a backlog order of close to 4,500 units.
However, it expects softer sales volumes in the second half of FY2024 with the lifting of sales tax exemption incentives and weaker consumer sentiment due to tighter financial conditions and interest rate hikes.
Meanwhile, TA Securities said constrained semiconductor inventory will prevail in 2023 despite the easing of supply chain bottlenecks, but automotive players should be able to increase production in the future.
“Therefore, we tweak our FY2024 and FY2025 earnings forecasts upward by 14.9% and 0.6% respectively, after incorporating the better-than-expected result in Q1 FY2024.
“We are also revising our average selling price and sales volume assumptions higher,” it said.
Bermaz Auto has declared a first interim single-tier dividend of five sen per share in respect of financial year ending April 30, 2024, with an entitlement date of Oct 20, payable on Nov 3, 2024.
Separately, inflationary pressures, geopolitical uncertainties and slower global growth are among factors expected to have a negative impact on the overall automotive market.
Hence, Bermaz Auto said market sentiments and economic conditions would still determine when it launches new models for marques such as Mazda, Peugeot and Kia, as well as models that have been given a facelift.
Malaysia’s total industry volume (TIV) registered a 1.7% increase to 63,676 units in July from 62,593 in June as automotive supply chains normalised and bookings for recently launched models were fulfilled.
As of July, the cumulative TIV was 429,807 units representing an increase of 48,127 units or 12.6% compared to 381,680 units in the same period last year.
In view of the positive outlook for the second half of 2023 (H2 2023), mainly underpinned by a stable economy, the Malaysian Automotive Association revised the TIV forecast for 2023 upwards from 650,000 units to 725,000 units.
At the time of writing, Bermaz Auto share price was down six sen or 2.67% at RM2.19 giving it a market capitalisation of RM2.56 billion.