RHB Research said that while the Deepal EV distributorship would expand BAuto’s EV offerings, it did not think it would be a volume contributor to the group.
PETALING JAYA: Analysts are not too excited about Bermaz Auto Bhd
(BAuto) being the distributor of Deepal brand of electric vehicles (EVs) in Malaysia, as they do not expect the distributorship to be a volume contributor to the group.
Kenanga Research estimates that the earnings impact of the latest development is negligible at less than 1%.
“The new distributorship requires minimum capital expenditure of probably less than RM2mil, no volume commitment and will take over the showroom vacated by Peugeot in Glenmarie, Shah Alam.
“Its other brand, Xpeng, is already occupying its other showroom next to Mazda Glenmarie. Given the crowded EV market with various new EV launches, we believe that at most it will only be able to sell 500 completely-built-up units during the first year of operations,” the research house said.
The models to be introduced would be the Deepal S05 and S07, which are expected to be competitively priced against BYD’s Dolphin and Atto 3.
BAuto was recently awarded the distributorship, sale of spare parts and provision of after-sales services for Deepal brand EVs in Malaysia by Chongqing Changan Automobile Co Ltd of China.
Changan Automobile is one of four major Chinese automobile groups in China, with 40 years of car manufacturing experience. It has 13 manufacturing bases and 34 vehicle and powertrain plants worldwide.
Kenanga Research maintained its “outperform” call on the company with target price of RM2.45.
Risks to its call include consumers cutting back on discretionary spending, particularly for big-ticket items like new cars, amid high inflation, supply chain disruptions and escalating input costs.
Meanwhile, RHB Research, which is maintaining its “buy” call on the stock, said that while the Deepal EV distributorship would expand BAuto’s EV offerings, it did not think it would be a volume contributor to the group and, hence, the impact would be minimal.
“We think Deepal will not significantly contribute to BAuto’s bottomline, as Malaysia’s EV market remains small at 2% of total car sales.
“As this brand is unlikely to be a volume contributor for BAuto, we make no changes to our earnings forecasts at this juncture. Our target price of RM3.05 takes into account a 4% environmental, social and governance (ESG) premium, based on its ESG score of 3.2,” the research house said.
