Bermaz Auto Berhad - Results undershot our expectations
Fri, 12-Sep-2025 07:52 am
by Research Team • Apex Research

Counter

BAUTO (5248)

Target Price (RM)

0.50

Recommendation

Sell

  • Bauto’s 1QFY26 CNP of RM8.3m down (-60.9% QoQ, -88.2% YoY) came in below expectations, accounted for 6% of both ours and consensus estimates. The earnings miss was mainly due to weaker-than-expected vehicle sales across key CKD models.

  • The Group declared a first interim dividend of 0.75 sen (ex-date 16 Oct) (1QFY25: 3.50 sen).

  • We have trimmed our FY26F, FY27F, and FY28F earnings forecasts by 58%, 46%, and 56%, respectively, to reflect heightened competitive pressures in the non-national segment and softer projected sales across key CKD models. We have also made housekeeping adjustments to our forecasts.

  • We downgrade Bauto to SELL (from HOLD) with a lower TP of RM0.50 (from RM0.93) pegged to 7.3x PE multiple on FY27F EPS of 6.87 sen.

 

Results below expectations. CNP came in at RM8.3m (-60.9% QoQ, -88.2% YoY), representing 6% of both ours and consensus estimate. The result was below our expectations weighed down by softer-than-anticipated sales performance across key CKD models.

 

Lower Dividend Declared. The Group declared a first interim dividend of 0.75 sen (ex-date 16 Oct) (1QFY25: 3.50 sen).

 

YoY. 1QFY26 CNP contracted sharply, down 88.2% YoY, while revenue decline 41.9% YoY. The weakness was primarily attributable to softer sales volumes, particularly for selected Mazda and Kia models which are nearing the end of their product lifecycles. This was further exacerbated by intensifying competition from the influx of Chinese marques adopting aggressive low-price strategies. Nonetheless, sales from Xpeng registered promising growth of 100% YoY, contributing 20% to the topline.

 

QoQ. CNP slumped 60.9% QoQ, in line with the 66% decline in profit margin. Similarly, revenue shed 7.1% QoQ, largely attributable to softer Mazda and Kia sales volumes, though partially cushioned by incremental contributions from XPeng. 

 

Outlook. Looking ahead to FY26, BAUTO is expected to contend with a challenging operating backdrop amid the influx of aggressively priced Chinese entrants. While XPeng’s early traction is encouraging, its contribution remains insufficient to meaningfully offset the erosion in Mazda and Kia sales domestically.

 

Earnings Revision. We have trimmed our FY26F, FY27F, and FY28F earnings forecasts by 58%, 46%, and 56%, respectively, to reflect heightened competitive pressures in the non-national segment and softer projected sales across key CKD models.Our earlier expectations for a recovery in Mazda sales have not materialised, with sales volume reaching only 52% of our estimate. With this, we have slashed our CKD sales volume to 5,860 units from 11,250 units. We have also made housekeeping adjustments to our forecasts.

 

Valuation. We downgrade Bauto to SELL (from HOLD) with a lower TP of RM0.50 (from RM0.93) pegged to 7.3x PE multiple on FY27F EPS of 6.87 sen, and ascribed with three-star ESG rating.  

 

Risk. Global trade and economic uncertainties, adverse FX movements, and a moderation in domestic demand amid a softer GDP and TIV outlook.

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