BAuto’s earnings recovery gains traction on new models

PETALING JAYA: Bermaz Auto Bhd (BAuto) is expected to sustain its earnings recovery in the financial year ending April 30, 2027 (FY27), supported by Mazda’s refreshed model line-up, stronger margins and improving contribution from its associates.

New launches, particularly the fully imported third-generation CX-5, are also expected to provide greater sales visibility and support the group’s growth over the next two years.

UOB Kay Hian Research, which viewed BAuto’s first-quarter FY27 (1Q27) core net profit as above expectations, maintained its “buy” call, while raising its target price to RM1.30 from RM1.14, pegged to 10.5 times its revised FY27 earnings forecast.

“We continue to like BAuto for its improving earnings trajectory, margin recovery and stronger growth visibility over the next two years, underpinned by Mazda’s refreshed line-up,” the research house said.

It expects Mazda sales to remain resilient at around 1,000 units a month, with the third-generation CX-5, due in October 2026, projected to contribute about 200 units monthly as Mazda3 sales normalise.

Also positive on BAuto, Kenanga Research retained its “outperform” call and raised its target price to RM1.30 from RM1.22 after lifting its FY27 and FY28 net profit forecasts by 6%.

“BAuto’s 1Q27 results beat expectations, staging yet another strong quarter with its core net profit soaring 389% year-on-year (y-o-y) on lower normalised effective tax rate, favourable sales mix skewed toward lower-priced higher-margin Mazda 3 1.5 CBU (completely built unit) and associates turnaround to profit on sustained production level,” the brokerage said.

It added that the all-new CX-5 CBU, Xpeng G6 and Xpeng X9 are expected to drive volume and margins from September and October 2026, while the stock offers an attractive dividend yield of 11%.

RHB Research upgraded BAuto to “buy” with a higher target price of RM1.15, after raising its FY27 to FY29 earnings assumptions by 14.9%, 12.6% and 14.9%, respectively, on higher margin assumptions.

“We believe FY27 will be an inflection year for BAuto, comfortably back to more than RM100mil profit level,” it said.

HLIB Research maintained “buy” on BAuto, with an unchanged RM1.18 target price, citing a healthy net cash position of RM187.4mil as at end-1Q27 and a 9.1% dividend yield.

“Its order backlog remains relatively healthy at 2,150 units, mainly supported by the Mazda 3 and new CX-5,” it said, citing BAuto’s management guidance.

CIMB Research, likewise, retained its “buy” rating and RM1.25 target price.

“BAuto is well positioned to return to growth in FY27 and sustain this momentum into FY28, underpinned by Mazda’s healthy product pipeline,” it said, projecting core net profit growth of 28.3% in FY27 and 7.1% in FY28.

BIMB Research remained more cautious, maintaining “hold” with a target price of 96 sen, pegged to 1.2 times FY27 book value.

It said recent share-price appreciation and ongoing pricing risks limited near-term upside.

One analyst told StarBiz that BAuto’s earnings momentum should remain intact as its refreshed Mazda line-up gains traction, while growing contribution from its associates provides an additional layer of support to overall profitability.

“The key catalyst going forward will be the group’s ability to translate new model launches into sustainable volume growth without compromising margins, particularly as competition in the Malaysian automotive market remains intense,” he said.