Bermaz Auto set for FY27 earnings rebound on strong Mazda demand

Bermaz Auto Bhd, Malaysia's exclusive distributor of Mazda, anticipates a stronger financial year (FY27) ending April 30, 2027, propelled by robust demand for the Japanese brand, new model releases, and increased margins. Analysts believe the distributor is set to return to growth in FY27 and maintain this momentum into FY28, thanks to a robust product lineup.

CIMB Securities analyst Mohd Shanaz Noor Azam sees the upcoming Mazda CX-5 as a significant near-term driver, with around 600 bookings already confirmed and deliveries anticipated by the end of September. The positive outlook follows a robust first quarter of FY27, where the distributor's revenue surged 12.6% year-on-year to RM553.1 million, and net profit jumped nearly fivefold to RM40.5 million.

The growth was primarily attributed to a surge in Mazda sales in Malaysia, which increased by 57.9% to 3,433 units. Analysts predict Mazda 3 demand will persist, buoyed by more competitive pricing from Mazda Motor Corp (Japan). CIMB Securities upholds a Buy rating with a RM1.25 target price. RHB Research analyst Iftaar Hakim Rusli upgraded BAuto to Buy from Neutral and raised its target price to RM1.15, citing renewed optimism for the company's FY27 earnings prospects due to new model launches and higher margins.

Meanwhile, Public Investment Bank analyst Denny Oh changed his stance to Outperform from Neutral and increased his FY27-FY29 earnings forecasts by an average of 26%. Despite non-national brands facing hurdles from cautious consumer spending and price wars, BAuto has managed to counteract these challenges through the launch of new CKD models like the Mazda 3, XPeng G6, and X9.

Upcoming releases such as the third-generation CX-5 are expected to further bolster BAuto's revenue outlook in the long run. However, HLIB analyst Daniel Wong warns of a highly competitive operating environment, citing aggressive model launches and attractive pricing by Chinese original equipment manufacturers, as well as weaker consumer sentiment due to higher cost-of-living pressures.

BAuto's Mazda order backlog stands at around 1,700 units, while XPeng has commenced local CKD production of the G6, with the X9 expected to follow. The Philippines business, however, remains challenging due to intense competition, constrained fuel supply, elevated fuel prices, and subdued consumer sentiment. HLIB has maintained a Buy rating with a target price of RM1.18, kept its FY27 earnings forecast, lowered its FY28 forecast by 0.7%, and set an FY29 forecast of RM137 million.