For QE31/7/2015, BJAuto's net profit dropped 5.5% q-o-q or 7.0% y-o-y to RM52 million while revenue rose 21% q-o-q or 1% y-o-y to RM512 million. Revenue grew by 21% q-o-q largely due to higher sales volume of Mazda vehicles in both the domestic and the Philippines market. Locally, the CKD models (Mazda3 SKYACTIV and Mazda CX-5 SKYACTIV) were the driving force behind the sales volume growth. In the Philippines, all the Mazda models distributed by the Group continued to perform well. Although the Group's revenue for the current quarter recorded strong growth, pre-tax profit declined by 4.8% q-o-q due to compressed gross profit margin caused by intense competition.
Table: BJAuto's last 8 quarters' financial performance
From the diagram below, we can see that BJAuto's profits are in a steady uptrend until the last quarter. The dip in profits is attributable to lower profit margins due to intense competition. The company could also be impacted by a weaker MYR.
Chart 1: BJAuto's last 12 quarters' financial performance
Chart 2: MYR-JPY's monthly chart as at September 11, 2015 (Source: XE.com)
Valuation
BJAuto (closed at RM1.98 last Friday) has a PER of 10.6 times (based on last 4 quarters' EPS of 18.6 sen). With earnings growth of 26%, BJAuto's PEG ratio is at a low of 0.4 time. Thus, its valuation is deemed acceptable.
Technical Outlook
BJAuto has broken below its long-term uptrend line at RM2.35 in August. Its temporary support is at RM1.90 and if that fails, it may go to RM1.60.
Chart 3: BJAuto's weekly chart as at Sept 11, 2015 (Source: Share Investors)
Conclusion
Despite negative technical outlook, BJAuto's rating is revised to HOLD (from TAKE PROFIT previously) in view of its attractive valuation.
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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