Tuesday 11 March 2014

BJAuto: All Borrowings Retired

BJAuto FY14Q3 Financial Result

BJAuto (RM mil) FY14Q3 FY14Q2 FY14Q1 FY13Q4 FY13Q3
Revenue 343.0 282.4 428.4
Assoc profit 3.3 2.6 2.1

PBT 43.5 37.5 36.2
PBT% 12.7 13.3 8.5
PAT 30.6 27.6 26.1

MAS Rev (C) 930.7 635.2

MAS OP (C) 100.3 62.4

PHI Rev (C) 123.2 75.7

PHI OP (C) 8.4 6.0

Total Equity 294.0 211.8
Total Assets 489.8 425.8
Trade Receivables 107.0 68.1
Inventories 106.7 120.8
Cash 196.2 166.5

Total Liabilities 186.1 205.1
Trade Payables 69.3 109.7
ST Borrowings 0.0 6.4
LT Borrowings 0.0 0.0

Net Cash Flow 14.1 -15.5

Operation 103.4 107.3

Investment -3.2 -0.1

Financing -86.1 -122.7

EPS (sen) 3.88 3.83

NAS (sen) 36.50 29.42
D/E Ratio NC NC
(C) = cumulative result

For its latest FY14Q3, BJAuto's revenue rises 24.5% while net profit increases 10.9% compared to its preceding FY14Q2. This great result is contributed by more vehicles sales and weakening of Japanese Yen against Ringgit which favours BJAuto who imports CBU Mazda from Japan.

Besides, sales in the Philippines continue to impress and its 30%-owned associate MMSB, which is involved in CKD Mazda production in Kulim, also starts to contribute more.

So far BJAuto's 9 months accumulated net profit has reached RM84.3mil. I think it should at least post a total net profit of RM110mil for the whole FY14.

With a total paid-up shares of 806.2mil, its projected EPS will be 13.6sen.

BJAuto's share price is at RM1.86 yesterday, which means it is trading at a forward PE of 13.7x at the moment.

What should be the ideal PE for BJAuto? Since it has a good potential of growth, I'll give a PE of 15x and thus a short term target price of RM2.04.

Its peers Tan Chong and UMW are currently trading at PE of 15.3 and 19.5 respectively.

It is quite incredible that BJAuto has retired all its loans before the end of Jan 2014. Currently it has zero borrowing with RM196.2mil cash on hand.

Tan Chong & UMW both have a net gearing ratio of around 0.5.

It seems to me that BJAuto is a good company to invest in. However, it is not cheap at the moment (forward PE 13.7x).

One of the lesson I learned last year is: Do not invest in good companies, but invest in good and undervalued companies.

Should I just play the waiting game and wait patiently for BJAuto's share price to fall to "undervalued" level?

I have played this "game" on Boilermech and Freight but it looks like so far I failed miserably...

Perhaps I should also look seriously into the future growth potential...

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