STOCK FOCUS OF THE DAY
Bermaz Auto: In better shape BUY
We maintain a BUY and an FV of RM2.60/share on Bermaz Auto (BAuto) based on an FY19F PE of 14x. Its FY18 core net profit exceeded expectations due to a stronger-than-expected 4Q, making up 116% of our and 131% of consensus estimates respectively.
For 4Q18, core net profit was up 29% QoQ and 148% YoY on 3 factors: (1) higher sales in Malaysia anchored to the CX-5 and CX-9 launched in the final quarter of CY2017; (2) a spike in associate earnings from MMSB’s more vigorous assembly of the new CX-5; (3) the stronger topline and margins for Malaysia ultimately mitigated the opposite trend seen for the Philippines.
We retain our earnings projections as the impact of the CX-5 and a stronger ringgit normalizes, and based on sales targets of 13.7K/15K and 6K/6.6K for Malaysia and the Philippines in FY19/FY20 respectively. Going forward, Malaysia will be supported by the launch of the new M6 (in 3QCY18), strong demand during the 3-month tax holiday and MMSB earnings from the continued ramp-up in CX-5 exports to new markets. In the Philippines, the price hike (of 4-5%) on most models from May will serve to absorb some impact of a weak peso.
RETAIL RESEARCH
Stocks On Radar: QL Resources, GFM Services, Frontken Corporation, GHL Systems
ECONOMIC HIGHLIGHT
Malaysia: Yen credit facility
NEWS HIGHLIGHTS
Construction Sector: At least RM15b to be shaved from ECRL
Property Sector: Stocks sink on Battersea probe news
George Kent: Posts record 1Q profit of RM21.5m
I-Bhd: i-City development to cash in on tourism sector
DISCLAIMER:
The information and opinions in this report are prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.
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