2QFY26 core net profit (CNP) came in at RM18.7m (+117.0% QoQ, –54.4% YoY), lifting 6MFY26 CNP to RM27.4m (–75.1% YoY). Results were in line with our expectations at 50% of full-year forecasts, but below consensus at 40%.
The Group declared a second interim dividend of 1.3sen (ex-date 22 Jan) (2QFY25: 10.0sen). bringing total DPS declared for 2HFY26 to 2.0sen (2HFY25: 13.5sen).
The QoQ surge in CNP was driven mainly by higher Mazda domestic unit sales, while the YoY decline reflects softer sales volume arising from increased competition following the entry of Chinese marques, despite XPeng partially cushioning the contraction.
Earnings unchanged, as competition-led volume pressures are broadly offset by contributions from new CBU launches and XPeng’s ramp-up, with no material deviation from base-case assumptions.
Maintain SELL with an unchanged TP of RM0.50 pegged to 7.3x PE multiple on FY27F EPS of 6.87sen.
Within Expectation. Excluding fair value adjustment on derivatives (+RM1.0m), inventories written down (+RM0.2m), property, plant and equipment written off (+RM0.6m) and other adjustments (–RM0.3m), BAUTO reported a 2QFY26 core net profit (CNP) of RM18.7m (+117.0% QoQ, –54.4% YoY), bringing 6MFY26 CNP to RM27.4m (–75.1% YoY). The results came in within our expectations at 50% of full-year forecasts, but below consensus at 40%.
Lower Dividend Declared. The Group declared a second interim dividend of 1.3sen (ex-date 22 Jan) (2QFY25: 10.0sen). bringing total DPS declared for 2HFY26 to 2.0sen (2HFY25: 13.5sen).
QoQ. CNP surged 117.0% QoQ, thanks to increase in operating profit (+21%; increase in unit sales of 18.1%, coupled with improved operating leverage). The stronger sales volume was driven mainly by higher Mazda domestic deliveries following the launch of the Mazda CX-60 and Mazda3 1.5L, which was partly offset by softer sales from Kia domestic operations and operations in the Philippines.
YoY. 2QFY26 CNP declined 54.4% YoY, primarily due to a 14.0% YoY drop in revenue following softer demand for certain Mazda and Kia models nearing the end of their product lifecycles. The entry of aggressively priced Chinese marques further intensified competition, weighing on sales volume and exerting additional pressure on core net margins.
YTD. Revenue similarly fell 29.1% YoY, driven mainly by a 35.6% YoY decline in unit sales. The decline was primarily driven by a sharp 92.1% YoY contraction in Kia CBU volumes, which was partially offset by incremental contributions from newly launched CBU models across other marques.Coupled with margin compression arising from weaker operating leverage, CNP contracted by 75.1% YoY.
Outlook. Heading into FY26, BAUTO faces a more competitive operating landscape following the accelerated entry of aggressively priced Chinese OEMs, which continues to weigh on Mazda and Kia domestic volumes. While early traction from XPeng is encouraging, its contribution remains minimal to meaningfully mitigate core brand weakness at this juncture. Meanwhile, the near-term demand environment in the Philippines remains soft amid slower macro growth, though a gradual recovery is expected into 2026.
Earning Revision. No changes to our earnings forecast. The near-term downside risks from intensifying competition and softer core brand volumes remain broadly offset by stabilising contributions from new CBU launches and XPeng’s gradual ramp-up. At this stage, we see no material deviation from our base-case assumptions to justify a revision.
Valuation. We maintained SELL with an unchanged TP of RM0.50 pegged to 7.3x PE multiple on FY27F EPS of 6.87sen, and ascribed with three-star ESG rating.
Risk. Global trade uncertainty, FX volatility, softer GDP and TIV trends, and intensifying competition from Chinese OEMs.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.077871 | 4.111430 |
| EUR | 4.800957 | 4.806968 |
| CNY | 0.580107 | 0.580830 |
| HKD | 0.523945 | 0.527748 |
| SGD | 3.158630 | 3.181638 |