For QE31/10/2014, BJAuto's net profit increased by 2.5% q-o-q or 108% y-o-y to RM58 million while revenue grew marginally q-o-q but rose 80% y-o-y to RM509 million. Revenue growth was marginal because of the contract assembler's paint shop shutdown in October 2014 due to upgrading works. Despite the plant shutdown in October 2014 resulting in less CX-5 CKD model sold, the Group's pre-tax profit still increased by RM4.5 million or 5.9% primarily due to better gross profit margin.
Table: BJAuto's last 8 quarterly results
Chart 1: BJAuto's last 10 quarterly results
Forex Movement
BJAuto is expected to benefit from the weakening of the JPY. Nonetheless, I believe that JPY poised for a technical rebound soon but it will remain weak. It is due to Japanese Central Bank's deliberate policy to weaken the JOY to support its export. This will be good news for BJAuto and other Japanese car distributors.
Chart 2: MYR/JPY & USD/JPY as at Dec 8, 2014 (Source: XE.com)
Valuation
BJAuto (closed at RM3.31 yesterday) is now trading at a PE of 13.8 times (based on last 4 quarters' EPS of 23.9 sen). With its high growth rate, this PE multiple is deemed reasonable. However, the company expected business prospect to be challenging in the near future due to the implementation of GST and weaker consumer sentiment.
Technical Outlook
BJAuto is in an uptrend. A tentative line can be drawn with support at about RM2.90.
Chart 3: BJAuto's weekly chart as at Nov 8, 2014 (Source: Share Investors)
Conclusion
Despite weaker financial performance, BJAuto is rated a HOLD based on.attractive valuation & bullish technical outlook.
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, BJAuto.
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