BJAuto: Mazda's On The Rise

Yesterday there was an article in Sin Chew:

汽車股漲勢或告終

The rise in automobile stocks share price might be over... 


I have been watching BJAuto closely since it was listed in Nov 2013.

After the announcement of its FY14Q2 result in Dec13, I said to myself that if its share price falls below RM1.30, then I'll buy its shares.

Apparently this does not happen, the closest it gets was RM1.60 in early Jan14, after that it resumed its gradual uptrend towards RM1.90.

Seriously I'm still dreaming of owning BJAuto's shares. Apart from being a Mazda fan, I opine that Mazda still has a big room to grow in Malaysia. Of course, my opinion may be biased because I like Mazda :)

Lets check how is Mazda vehicles sales in CY2013.

For 2013, the total numbers of Mazda vehicles sold increases by 45% YoY to 9,197 units. Although it is still miles behind the trio of Toyota, Nissan & Honda, the improvement is encouraging to me.

Anyway, Nissan & Honda also achieve around 46-47% increase in sales, while Toyota's sales dropped.

For Mazda, the sales in 2013 is mainly supported by its CX-5 & New Mazda 6.

Compared to previous years, Mazda is growing in Malaysia every year since year 2010.

Mazda's sales in Malaysia:

2010 - 4,325

2011 - 6,028

2012 - 6,332

2013 - 9,197

In Mazda's FY14Q2 result (from Aug-Oct13) released in Dec13, its quarterly revenue fell significantly even though net profit managed to better its preceding quarter. This was said to be due to supply issue from Japan as well as CKD CX-5.

So can we expect lower sales for its upcoming FY14Q3 financial result?

The table above shows vehicles sales in the first half of CY2013.

With a total of 9,197 units sold in 2013, this means there are 4,216 Mazda vehicles sold in the second half of CY2013, a slight fall from 4,981 in the first half.

BJAuto's FY14Q3 is from Nov13 to Jan14. Lets check Jan14 vehicles sales.

A total of 797 units of Mazda vehicles were sold in Jan14, which is slightly higher than average per month of 766 units in 2013.

Meanwhile, BJAuto 60% owned operation in Philippines has seen a healthy growth from 5.2% of total revenue in the end of FY13, to 10.6% 6 months later.

As there is no introduction of new models in the end of 2013, I expect a flat revenue in FY14Q3 compared to FY14Q2 while its margin should stay about the same.

       Mazda in Philippines: Not so popular but is on the rise

At share price of above RM1.80, BJAuto is trading at a PE of 13.2x based on a projected net profit of RM110mil for FY2014 (ends in April 2014). So, it is not very attractive to me.

However, looking at the future and its growth potential, BJAuto looks quite attractive to me.

• The new SKYACTIV Mazda 3 will be launched this month. The same model is also set to be launched in the Philippines in May 2014.

• BJAuto will benefit from the new NAP as its SKYACTIV models (CX-5, new Mazda 3 & Mazda 6) are classified as Energy Efficient Vehicles (EEVs). Thus it should enjoy higher excise duty rebate.

• Its new assembly facility in Inokom plant is on schedule to start operation in April 2014. This will improve sales contribution from CKD models. BJAuto will probably starts its CKD production on the new Mazda 3 and Mazda 6 in the second half of CY2014.

• BJAuto plans to launch 5 new models from now until 2016, in which the new Mazda 2 is expected to be launched as early as the final quarter of 2014! (according to RHB analyst report)

• It seems like BJAuto is in negotiation with local partner to distribute Mazda vehicles in Indonesia. If this is successful, it will surely boost BJAuto's earning in long term.

       The new SKYACTIV Mazda 2

Though consumer spending sentiment seems to be kept in check at the moment, Frost & Sullivan still predicts Malaysia vehicles sales to grow 4.2% YoY in year 2014.

For me, there is no reason that Mazda cannot compete with the likes of Toyota, Honda & Nissan in Malaysia. The only problem for Mazda now is its unpopularity and thus low second hand value.

I'll add in a poll in the right column of this blog, to collect the views of readers about Mazda. Please feel free to vote :)

I believe that Mazda can be as popular as the T,H,N brands one day and its sub-sale value can be on par with those competitors, though this may only happen in dreams?

If Mazda is able to achieve annual vehicles sales like T,H,N (above 50,000 units sold a year), then BJAuto's share price should worth at least RM10. Haha, dreaming again.