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Tuesday, June 10, 2014

RHB Research maintains Buy on Berjaya Auto


KUALA LUMPUR: RHB Research has maintained its Buy call on Berjaya Auto with a target price of RM3.20 as the research house nudged the group’s earnings forecasts for FY14/15/16 to 11/21/14%.
“As such, we peg our stock to a new target CY15 P/E of 12.5 times (from 11.5 times), which is broadly in line with peer target valuations, to derive a new target price of RMR3.20 (from RM2.55).
“It is currently trading at an undemanding FY15F P/E of 9.3 times, relative to its 3-year earnings CAGR of 60.5%,” it said in a note on Tuesday.
RHB said it is upbeat on Berjaya Auto’s 4QFY14 results, which are scheduled to be announced on 11 June.
“We expect it to register earnings of RM48mil, along with  record-high margins, for the quarter.
“Going forward, the aggressive expansion of its model line-up and completely knocked- down (CKD) operations will fuel growth,” it said.
RHB also noted that it is excited over Berjaya Auto’s five upcoming launches of new models – the new Mazda2 and the smaller CX-3 sport utility vehicle – over the next three years.
“Our recent chat with its management suggests that the third model scheduled to be launched will be the MX-5.
“Meanwhile, the commissioning of the Inokom plant is on schedule and the CKDMazda3 and Mazda6 models are expected to hit the market by 4Q14 and 1Q15 respectively,” it said.

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