CGS-CIMB expects Bermaz Auto sales to grow 10pc in FY21

KUALA LUMPUR, Sept 14 — CGS-CIMB expects Bermaz Auto Bhd’s sales volume to grow by 10 per cent year-on-year in financial year 2021 (FY21), mainly driven by recovery in the local market.

In a research note, today, it also projected higher margins from the second quarter of FY21 onwards, given that no additional cash rebate was recorded following the sales tax waiver implementation on June 15, 2020.

“We gathered from management that Bermaz Auto currently has an order backlog of 2,000 units, which is expected to be delivered within the next two months.

“We are optimistic that the current outstanding bookings will be translated into sales in spite of concerns over the expiry of the loan moratorium at the end of September given its premium customer profile,” it said.

As it rolls over its valuation to end-2021, the research house reiterated its “Add” call on the company with a lower target price of RM1.80 from RM2 previously, in line with its target sector price earning.

“Potential new model localisation projects or new principal partners and a higher take-up during the sales tax waiver period are potential re-rating catalysts; intense competition in the SUV market, delayed recovery in the Philippines and depreciation of the ringgit are key downside risks,” it added. — Bernama