Positive feedback for Berjaya Auto in Hong Kong roadshow

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KUCHING: News of the current management buying out Berjaya Group’s stake in Berjaya Auto Bhd (Berjaya Auto) was positively taken and it was the main focus a Non Deal Roadshow (NDR) in Hong Kong.

According to a report by Maybank Investment Bank Bhd’s research arm (Maybank IB Research), other highlights include potentially higher dividend and listing of its Philippines operation.

Following news of a SPV structure for the current Berjaya Auto management to hold a controlling stake in Berjaya Auto, Berjaya Group was able to pare down its initial 21.88 per cent stake to 14.05 per cent via private placements to selected institutional shareholders.

Further clarity is pending from management on the revised structure of the SPV.

“Nonetheless, we remain positive on this development which exerts management’s confidence in Berjaya Auto’s outlook,” said the research house analysts.

Other key positives discussed were the potential of higher dividend and the listing of 60 per cent-owned Philippines operation.

“There could be much value to unlock, in our view, given that car sales in the Philippines have been buoyant, with a 19 per cent four-year compound annual growth rate (CAGR).

“The closest comparison in the Philippines auto industry would be GT Capital, a conglomerate with exclusive distributorship of the Toyota marque.

“Our MKE Philippines Research counterpart values GT Capital’s auto business at 25.5 times CY17 earnings per share (EPS) for Toyota’sunrivalled dominance in the Philippines market,” it added.

Drastic fluctuation in the yen to ringgit rate could swing earnings. Also, delays in the launch of the CX-3CKD would negatively impact earnings forecasts.