KUALA LUMPUR, Nov 5 (Bernama) -- Bursa Malaysia closed higher, buoyed by Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 2.75 per cent, alongside positive cues from Wall Street. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 19.30 points, or 1.19 per cent, to 1,635.86 from Wednesday’s close of 1,616.56. The benchmark index opened 6.72 points higher at 1,623.28, and fluctuated between an intraday high of 1,642.44 and a low of 1,622.62 during the trading session. However, market breadth was negative, with losers outnumbering gainers 723 to 497, while 466 counters were unchanged, 1,075 untraded and 10 suspended. Turnover rose to 3.74 billion units valued at RM3.61 billion compared with yesterday’s 2.81 billion units valued at RM2.57 billion.
Sales of Mazda and Kia vehicles are anticipated to rise in the coming months, despite a weaker-than-expected first quarter for Bermaz Auto Bhd (KL). Analysts remain optimistic, noting the company's above-average dividend yield of 10% and a proposed investment in EP Manufacturing Bhd (KL) as positive factors.
Bermaz Auto's net profit for the first quarter ended July 31, 2024 (1QFY2025), represented only about 23% of the consensus full-year estimate. However, RHB Investment Bank (RHB IB) maintains a 'buy' call on the stock, highlighting that the first quarter is typically a weaker period for the company. The decline in sales was partly attributed to a higher base of comparison from the previous year, driven by significant shipments of Mazda 3, Mazda 6, and imported CX-3 vehicles to clear backlogged orders during the Covid-19 pandemic.
Looking ahead, Bermaz Auto's sales are expected to be primarily supported by its volume-heavy, locally assembled Mazda models, along with the launch of a new Kia Sportage SUV later this year, according to RHB IB.
Shares of Bermaz Auto fell by 1.7% or four sen to RM2.33 on Thursday morning, reducing the stock's year-to-date gains by about 9% since reaching its peak on July 16. Despite this, 10 out of 15 research houses covering Bermaz Auto have maintained a 'buy' rating on the stock, with the remaining five on 'hold.' The consensus 12-month target price is RM2.83, suggesting a potential return of 21% from the current share price.
Positive Impact of EP Manufacturing Investment
On Wednesday, EP Manufacturing announced a placement of 15% each to its largest shareholder, Mutual Concept Sdn Bhd, and Bermaz Auto, raising RM39.65 million to partially finance the construction of a new manufacturing hub in Melaka. Following the placement, Bermaz Auto will hold an 11.54% stake in EP Manufacturing’s enlarged share base, making it the second-largest shareholder after executive chairman and founder Hamidon Abdullah.
Analysts view Bermaz Auto's investment in EP Manufacturing as a strategic diversification move to ensure the viability of its completely knocked-down (CKD) program amid increasing interest in domestic assembly from Chinese automotive original equipment manufacturers. CIMB Securities sees this investment as a strategy to secure future partnerships, while CGS International believes it could pave the way for collaborations with EP Manufacturing, which recently secured two vehicle assembly agreements with China’s Great Wall Motor and Beijing Automotive Industry Corp International.
RHB IB also views the investment positively, noting that it could help ensure a stable supply of components for Bermaz Auto's assembly of Mazda vehicles in Malaysia.
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