BJAuto: Earnings dropped

Results Update

For QE31/1/2015, BJAuto's net profit dropped by 19% q-o-q but rose 52% y-o-y to RM47 million while revenue dropped by 24% q-o-q but rose 13% y-o-y to RM389 million. The q-o-q decline in the Group's revenue was primarily due to lower sales volume of Mazda vehicles in Malaysia, whereby intense price war coupled with fewer consumers buying cars towards end of calendar year 2014 has affected sales of certain popular models. Furthermore, the paint shop upgrading work at Inokom's plant in the month of October and part of November 2014 has affected supply and therefore sales of CKD models in this current quarter. In line with lower revenue, Group's pre-tax profit has decreased by RM14.8 million or 18.3%. Included in the current quarter pre-tax profit is a Group ESOS expense of RM2.4 million while for the preceding quarter the Group ESOS expense was RM2.5 million.


Table: BJAuto's last 8 quarterly results


Chart 1: BJAuto's last 11 quarterly results
 
Valuation

BJAuto (closed at RM3.61 yesterday) is now trading  at a PE of 14 times (based on last 4 quarters' EPS of 25.78 sen). With its high earnings growth, this PE multiple is deemed reasonable.

Technical Outlook

BJAuto is in an uptrend line with support at RM3.50. Its immediate resistance is at RM3.76.


Chart 2: BJAuto's weekly chart as at Mar 10, 2015 (Source: ShareInvestor.com)

Conclusion

Despite a drop in its 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.