Results: Cycle & Carriage Bintang (CNCB MK, Not-rated) - A pure proxy to Mercedes Benz’s tremendous growth

Just a follow-up on Cycle & Carriage Bintang following their 4Q15 results released yesterday.

We had previously featured CNCB in our 1H15 Auto TIV note dated 29 July 2015 (attached).

Results: Cycle & Carriage Bintang (CNCB MK, Not-rated) - A pure proxy to Mercedes Benz’s tremendous growth

• 2015 earnings jumped 4-fold. 4Q15 net profit of MYR10m (-24% QoQ, +212% YoY) lifted 2015 earnings to MYR52m (+4x YoY). QoQ fall in earnings was attributed to a contraction in vehicle sales of 13% in 4Q15 (Total Msia Merc sales: 2,695 units in 4Q15 vs 3,106 units in 3Q15). CNCB also announced a 5sen final dividend (to go ex on 27 Apr 2016), representing 1.3% yield to yesterday’s closing price; first dividend in the last 3 years.
• New model launches to drive sales. Having recorded strong sales in 2015 [Total Msia Merc sales: 11,034 (+55% YoY)], Mercedes Benz is looking to strengthen its position further with the recent debut of its SUV-models  (i.e. GLC, GLE). Coupled with a (i) new D-segment E-Class (due for replacement), (ii) facelift on A-Class and (iii) a competitive pricing for its C-Class CKD, sales outlook remains promising.
• Undemanding valuations. At MYR3.64 currently, CNCB trades at 7x CY15 PER. Balance sheet is decent with MYR16m net cash as at end-Dec 2015.