KUALA LUMPUR, Feb 11 (Bernama) -- Bursa Malaysia ended higher today as buying on selected blue chips continued, said a brokerage. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 8.85 points or 0.51 per cent to 1,756.39 from Tuesday’s close of 1,747.54. The barometer index opened 3.69 points higher at 1,751.23 before moving as low as 1,745.51 in early trade to as high as 1,757.15 during the mid-afternoon session. Market breadth was positive with gainers leading losers 575 to 474, while 549 counters were unchanged, 1,087 untraded and 11 suspended. Turnover expanded to 2.55 billion units valued at RM3.06 billion from yesterday’s 2.19 billion units valued at RM2.35 billion.
Maintain Buy with unchanged Target Price of RM2.40
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| Berjaya Auto Bhd |
We maintain our BUY call for Berjaya Auto due to its:
1. Attractive product pipeline going forward;
2. Aggressive expansion from its Philippines operations, helped by a booming auto market (projected growth of 15% in 2016); and,
3. Strong ability to capture market share (2.4% YTD from 1.5%).
Continuously filling its product pipeline.
We expect Berjaya Auto (BAuto) to maintain an interesting product launch schedule in 2016, mainly from its facelifted models and diesel variants. The face-lift completely knocked down (CKD) CX-5 was recently launched in February, while the CKD CX-3 is anticipated to hit the market by end-2016. As for its “diesel wave”, we believe Mazda 6 would be introduced by mid-year. The diesel CKD CX-5 is also likely to be offered, as the model is already being assembled in Malaysia for the Thailand market.
Strong growth from the Philippines.
The Philippines operations recorded a quarterly sales growth of 41.8% YoY, driven largely by the Mazda 2 and Mazda 3, which saw an increase of volume by 69.3% and 36.4% YoY respectively. The Philippines market would become increasingly significant for BAuto, with industry sales expected to grow 15% to 350,000 units.
Forecasts and risks.
We revised our earnings forecasts for FY16-18 down by 9.4%, 3.7% and 5.0% respectively. Downside risks for our recommendation and TP include: i) unfavourable forex movements, ii) disruption in product pipeline, and iii) lacklustre consumer spending.
Source: RHB Research
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