FW: AmBank Reserach - Bermaz Auto : On the climb, 12 Sep 2017 (Amended copy)

 

STOCK FOCUS OF THE DAY

Bermaz Auto : On the climb        Buy

 

We maintain BUY on Bermaz Auto (BAuto) with an unchanged FV of RM2.30 based on an FY18F PE of 13x. 1QFY18 core net profit of RM23mil lagged behind our full-year projection of RM199mil and consensus' estimate of RM183mil. However, we maintain our numbers in anticipation of better results in the second half of FY18 premised on stronger sales and margins.

 

We note three main points from this set of earnings. First, revenue climbed for the second quarter from the trough in 3QFY17 (November 2016-January 2017). Second, the company's bottomline in 1QFY18 was hit by the move to clear out the existing CX-5 with various sales incentives. Third, company will pay a smaller dividend in tandem with the lower earnings, but the payout ratio is higher this time around. It proposed a dividend of 1.5 sen/share (half of the 3.0 sen paid for 1QFY17), but this translated into a higher payout ratio of 86% (vs. 84% in 1QFY17).

 

Others :

Banking Sector : 2Q17 Earnings Report Card: Provisions higher than previous quarter       Overweight

Plantation Sector : Inventory up 8.8% MoM in August     Neutral

 

STOCK ON RADAR

Excel Force MSC, Eonmetall Group, Astino, Insas

 

ECONOMIC HIGHLIGHT

Malaysia – Strong exports but lukewarm domestic activities

 

NEWS HIGHLIGHTS

Highway operators : PLUS receives takeover offer from Maju Holdings

Oil & Gas Sector : Oil price rises as US refineries restart, Irma wanes

MAHB : Passenger traffic up 7.8% y-o-y in August

Ibraco : Kuching-based Ibraco eyes project in the Klang Valley