Bermaz Auto (BAUTO) 1QFY26 Results Miss Estimates: Earnings Slump, Sales Fall 48% – Maintain HOLD, Strong Cash Position Supports Outlook

Broker Name: Maybank Investment Bank Berhad
Date of Report: September 12, 2025
Bermaz Auto Berhad Faces Industry Headwinds: Full Earnings Breakdown, Dividend Outlook, and Investment Analysis

Overview: Bermaz Auto Berhad Confronts Challenging Automotive Landscape

Bermaz Auto Berhad (BAUTO MK), the franchise holder and sole distributor of Mazda, Peugeot, and Kia vehicles in Malaysia (and Mazda in the Philippines), has released its 1QFY26 results. The report, prepared by Maybank Investment Bank Berhad, reveals a sharp decline in profits and sales, reflecting intense industry competition and a cooling post-pandemic vehicle market cycle.
Maybank maintains a “HOLD” recommendation, revising the target price to MYR0.68 (from MYR0.96), now based on 1.2x FY26E Price-to-Book (-2SD), citing BAUTO’s strong balance sheet and asset-light, cash-generative model as key downside protection.

Key Takeaways and Investment Thesis

1QFY26 core net profit (CNP) fell to MYR8.8m, missing both Maybank and consensus estimates, at only 6% and 7% respectively.
FY26–28E earnings cut by 64%/46%/46% due to lower sales and margin assumptions.
Valuation switched from PER to PB, reflecting >MYR180m net cash and robust recurring free cash flow.
Dividend payout remains attractive, supported by a strong cash buffer (~MYR355m/31 sen per share).
Industry headwinds include model cycles, backlog exhaustion, and fierce competition from Chinese automotive brands.

Quarterly Financial Results and Performance Analysis

Metric	1QFY26	4QFY25	1QFY25	YoY Change	QoQ Change
Revenue (MYR m)	491.3	528.6	846.2	-41.9%	-7.1%
EBIT (MYR m)	31.7	35.7	88.7	-64.2%	-11.3%
EBITDA (MYR m)	32.0	38.5	89.2	-64.2%	-16.9%
Net Profit Ex one-offs (MYR m)	8.8	21.5	69.7	-87.3%	-58.9%
EBIT Margin (%)	6.5	6.8	10.5	-4.0 ppt	-0.3 ppt
Vehicle Unit Sales	2,638	2,969	5,117	-48.4%	-11.1%

Sales Breakdown: Malaysia and Philippines

Malaysia revenue: MYR425m (YoY -43.7%, QoQ -8.7%)
Philippines revenue: MYR66.3m (YoY -27.4%, QoQ +4.6%)
Assoc. losses: MMSB, Inokom, and Kia contributed to associate losses, unlike last year when they posted profits.

Dividend and Cash Position: Robust Payouts Continue

Declared 0.75 sen DPS for 1QFY26, implying a 105% payout.
Assumed payout ratio for FY26-28E is 70%, offering dividend yields of around 5%.
Company maintains strong net cash (over MYR180m, ~29% of market cap), with cash buffer of c.MYR355m (31 sen/share).

Industry Headwinds: Competition and Model Cycles Impact Results

Vehicle sales normalized after a two-year super cycle; competitive pressure intensified from Chinese brands, squeezing Mazda and Kia volumes.
Order backlogs are rising: Current 3,580 units (vs. 1,580 last quarter), led by CX60 and Mazda 3.
EBIT margin contracted 4.0ppt YoY due to higher dealer incentives.
All associates swung into losses, further dragging results.
Margins could recover from 2QFY26, supported by renewed principal support for Mazda (from July 2025).

Stock Performance and Shareholder Structure

12-month price target: MYR0.68 (+1%)
Previous target: MYR0.96
Current share price: MYR0.68
Market capitalisation: MYR791.2M (USD187M)
Issued shares: 1,172m
Major shareholders: Dynamic Milestone Sdn. Bhd. (15.2%), Employees Provident Fund (10.5%), Permodalan Nasional Bhd. (8.2%)
52-week high/low: MYR2.36/MYR0.66

Financial Forecast and Key Metrics

Metric	FY24A	FY25A	FY26E	FY27E	FY28E
Revenue (MYR m)	3,930	2,624	2,180	2,222	2,265
EBITDA (MYR m)	446	224	118	116	118
Core Net Profit (MYR m)	346	157	51	77	79
Core EPS (sen)	29.7	13.4	4.3	6.6	6.8
Net DPS (sen)	26.0	16.8	3.0	4.6	4.8
Core P/E (x)	7.8	7.8	15.5	10.2	9.9
P/BV (x)	3.3	1.9	1.2	1.2	1.1
Net Dividend Yield (%)	11.3	16.0	4.5	6.9	7.1
ROAE (%)	43.7	21.4	7.8	11.5	11.5
Net Gearing (%)	net cash	net cash	net cash	net cash	net cash

Revised Earnings Forecast: Margin Pressure and Lower Sales

Maybank has revised its estimates substantially, reducing FY26-28E earnings by 64%/46%/46% in light of lower vehicle sales and margin assumptions. Key sales assumptions were cut by 10% for each year.

FY26E revenue: MYR2,180m (down from MYR2,546m)
FY26E core PATMI: MYR50.6m (down from MYR140m)
EBIT margin now expected at ~4.9% vs. previous ~7.4%
Vehicle sales forecast for FY26E: 14,450 units (down from 16,100)

Product Line-Up and Strategic Moves

New Mazda models set for CY2025, expected to support volumes and margins.
EV model line-up introduced, including XPeng with 386 units sold in 1QFY26.
Order backlog now 3,580 units, led by CX60 and Mazda 3.

Risk Factors and Outlook

Soft consumer sentiment and unattractive new launches may further drag earnings.
Foreign exchange volatility could impact profitability and operational planning.
Execution risks, cost overruns, or absence of new orders pose downside risks.
Despite near-term challenges, BAUTO’s strong balance sheet and recurring free cash flow provide resilience and dividend support.

Historical Stock Recommendations and Price Targets

Date	Rating	Target Price (MYR)
12 Sep	Buy	2.9
13 Mar	Buy	3.3
14 Mar	Buy	3.5
13 Jun	Buy	3.5
13 Sep	Buy	4.1
23 Nov	Buy	3.5
14 Mar	Buy	3.5
12 Jun	Buy	3.0
26 Nov	Buy	2.4
13 Mar	Hold	1.1
13 Jun	Hold	1.0

Conclusion: Investment Outlook and Strategy

Bermaz Auto Berhad’s current valuation reflects the prevailing industry headwinds, including margin compression and rising competition. While near-term earnings outlook is challenging, the company’s strong balance sheet, significant cash reserves, and recurring free cash flow provide robust downside protection and support for sustained dividends.
Investors should monitor the evolving competitive landscape, upcoming model launches (especially in the EV segment), and order backlog trends. BAUTO remains a resilient automotive player with defensive cash and dividend characteristics, but upside may be capped until earnings visibility improves. The 1QFY26 results underscore the importance of quality balance sheets and prudent capital allocation in a volatile automotive market.