Maybank Investment Bank Berhad
Date of Report: September 17, 2025
Bermaz Auto Berhad: Dividend Prospects Shine Amid Industry Headwinds and Strong Cash Position
Overview: Solid Dividend Avenue and Defensive Play in Malaysia’s Auto Sector
Bermaz Auto Berhad (BAUTO MK), a leading franchise holder and distributor for Mazda, Peugeot, and Kia in Malaysia, and Mazda in the Philippines, maintains its position as a resilient, asset-light automotive player. With a robust net cash balance, steady free cash flow, and a disciplined approach to dividends, BAUTO stands out for its defensive characteristics and potential for special payouts — even as the automotive market faces macroeconomic and regulatory challenges.
Investment Summary
Rating: HOLD
Target Price: MYR 0.68 (7% upside from MYR 0.64)
Valuation: 1.2x FY26E Price-to-Book, reflecting strong balance sheet and cash-generative business
Dividend Payout: High visibility, with potential upside from associate cash repatriation
Key Risks: Macro headwinds, competitive pressures from Chinese brands, regulatory changes affecting EVs and subsidies
Key Financial Highlights
| 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 Dividend (sen) |
26.0 |
16.8 |
3.0 |
4.6 |
4.8 |
| Dividend Yield (%) |
11.3 |
16.0 |
4.8 |
7.3 |
7.5 |
| Net Gearing (%) |
Net cash |
Net cash |
Net cash |
Net cash |
Net cash |
Business Model: Asset-Light, Cash-Generative, and Dividend-Focused
BAUTO’s strength lies in its asset-light distribution model, high cash yields, and minimal capex requirements. With exclusive distribution rights, robust principal relationships, and an entrenched dealer/aftersales network, the company is well-positioned to weather cyclical industry downturns. Its strong net cash position — exceeding MYR180 million (approx. 25% of market cap) — provides significant downside protection and dividend capacity. Recurring free cash flow, often above MYR120 million EBITDA annually, underpins both regular and special dividend payouts.
Company and Shareholder Profile
Market Cap: MYR 744.3 million (USD 177 million)
Issued Shares: 1,172 million
Major Shareholders:
Dynamic Milestone Sdn. Bhd. (15.2%)
Employees Provident Fund (10.5%)
Permodalan Nasional Bhd. (8.2%)
Free Float: 66.1%
52-Week High/Low: MYR 2.36 / 0.61
Operational Updates: Mazda, Kia, XPeng, and Deepal
Mazda: Pipeline Expansion and Bookings Surge
Recent Launches: Mazda CX-60 and Mazda 3 have been well-received, garnering 500 and 1,700 bookings respectively.
Total Bookings: Mazda MY has approximately 3,000 units booked, up from 1,000 units in the previous quarter.
Upcoming Models: Broadening into the mass-to-premium segment with a B-segment subcompact SUV (FY28E CKD target), CX-80, and the new CX-5 CKD (FY27E).
Kia: Challenges and Inventory Management
Current Focus: Clearing Carnival and Sportage inventories (~1Q stock).
Strategic Direction: Seeking stronger support from principals and refreshed model introductions to regain momentum.
XPeng: EV Momentum and Localization Plans
Sales: Sustained at >100 units/month with healthy margins.
Launch Pipeline: Two to three new model launches by 2026.
Inventory: Clearing ~150 units of old stock before CBU EV incentive expiry in late 2025.
Post-Incentive Risks: CBU EV prices may rise 40–50% post-incentive.
Localization: SKD/CKD plans progressing; engagement with regulators on new EV tax framework.
Deepal: Progress Stalled
Discussions with Deepal regarding partnership and product launches remain stalled.
| Brand/Market |
FY25 Sales |
FY26E Sales |
Bookings |
| Mazda – Malaysia |
11,468 |
10,000 |
3,000 |
| Mazda – Philippines |
1,779 |
2,100 |
250 |
| Kia |
951 |
1,000 |
80 |
| XPeng |
824 |
1,600 |
250 |
| Total |
15,022 |
14,700 |
3,580 |
Associate and Regional Performance
Mazda Malaysia: Recorded minor losses in 1QFY25 due to continued sales declines. Recovery is expected as principal support strengthens and new CKD programs (including exports) are launched.
Kia Malaysia: Facing minor losses in the near term while under strategic review.
Inokom: Weak 1QFY26 results attributed to lower volumes and a shift from a cost-plus model to a more transparent, sustainable business structure. No major write-offs anticipated.
Berjaya Auto Philippines (BAP): Focuses on higher-margin Mazda models (Mazda 3, CX-5, CX-8) and is exploring partnerships with Chinese OEMs to introduce range-extended and plug-in hybrid models by end-2026.
Dividend Outlook: Strong, With Potential Upside
Recent Developments: BAUTO recently received MYR 6.3 million in dividends from Mazda Malaysia (50% payout of MYR 42 million FY25 profit).
Dividend Assumptions: The company assumes a 70% payout ratio, implying a 5% dividend yield.
Special Dividend Possibility: Up to MYR 130 million in cash could be repatriated from BAP, enabling a special payout.
Cash Position: BAUTO’s share of group and associate cash exceeds MYR 300 million (approx. 40% of market cap).
Industry and Regulatory Challenges
Competitive Pressure: Mass-premium segment faces overcapacity and price competition from Chinese automakers, impacting resale values and margins.
Regulatory Uncertainty: Potential risks from subsidy rationalization, OMV (Open Market Value) implementation, and the expiry of EV incentives.
EV Transition: Malaysia’s accelerating shift towards electric vehicles poses both opportunity (new product launches) and risk (post-incentive pricing).
Key Financial Metrics and Ratios
| Metric |
FY24A |
FY25A |
FY26E |
FY27E |
FY28E |
| EBITDA Margin (%) |
11.4 |
8.5 |
5.4 |
5.2 |
5.2 |
| Net Profit Margin (%) |
8.8 |
5.9 |
2.3 |
3.5 |
3.5 |
| ROAE (%) |
43.7 |
21.4 |
7.8 |
11.5 |
11.5 |
| ROAA (%) |
18.9 |
8.8 |
3.1 |
4.8 |
4.8 |
| FCF Yield (%) |
7.3 |
17.5 |
48.2 |
10.1 |
22.5 |
Strategic Value Proposition
Asset-Light Distributor: Focused on Mazda, Kia, and XPeng in Malaysia and the Philippines.
Cash-Generative: MYR 350 million gross cash, low capex, and strong free cash flow.
High Dividend Visibility: Historical payout ratios above 70%, with potential for special dividends.
Barriers to Entry: Exclusive rights, strong principal support, and a wide dealer/aftersales network.
Upside and Downside Risks
- Upside Catalysts:
- Stronger-than-expected uptake of new Mazda models.
- Unlocking of associates’ cash reserves and sustained balance sheet strength.
- Margin expansion from cost efficiencies, enhanced principal support, or extended EV incentives.
- Downside Risks:
- Weaker demand for Mazda/Kia in a competitive market.
- Prolonged losses at associates or adverse model mix impacting EBIT margins.
- Higher dealer incentives or negative regulatory developments.
Conclusion: Defensive, Cash-Rich, and Dividend-Focused
Bermaz Auto Berhad’s defensive business model, cash-backed valuation, and high dividend payout potential make it a notable mid-cap auto proxy in Malaysia. While market headwinds and regulatory risks persist, the company’s strong cash position, reliable free cash flow, and focused operational strategies offer investors a compelling blend of income and downside protection. Investors seeking exposure to Malaysia’s auto sector with a preference for yield and capital preservation may find BAUTO an appealing, albeit not high-growth, opportunity in the current environment.
