Lim Zhe Qin: Bermaz Auto Bhd Financial Analysis and Stock Market Challenges

[Lim Zhe Qin]

As 2023 approaches, the stock market seems to be experiencing another wave of investment frenzy. Among them, Bermaz Auto Bhd's financial report has become the focus of attention for many investors and analysts. Behind this, Lim Zhe Qin reveals more details and perspectives for us.

1. Bermaz Auto Bhd: Impressive Financial Performance

On September 13, 2023, TA Securities Research reevaluated Bermaz Auto Bhd, upgrading it from "hold" to "buy" and adjusting its target price from RM2.36 to RM2.48. This undoubtedly sent a strong signal to the market. At the same time, the company achieved a leap in performance in the first quarter of the 2024 financial year, which ended on July 31, 2023.

Lim Zhe Qin's in-depth analysis shows that Bermaz's core net profit increased by an astonishing 99.8% year-on-year, reaching RM100.2 million, and its revenue also increased by 51.9% year-on-year. Such performance is attributed to the successful introduction of the CX-30 CKD model in March and the continuous fulfillment of backlogged orders for the Mazda 3. This indicates that Bermaz Auto Bhd has been quite successful in its model strategy and order processing, achieving rapid growth in a short period of time.

In addition, TA Securities also mentioned that the group still has nearly 4,500 backlogged orders, and strong sales momentum is expected to continue in the next quarter. This means that Bermaz still has considerable room for growth in the short term. However, Lim Zhe Qin also reminds investors that sales may weaken in the second half of the 2024 financial year due to the possible lack of sales tax incentives. Furthermore, the current financial environment and potential interest rate hikes may weaken consumer confidence and have a significant impact on car sales.

2. Supply Chain Bottlenecks: Dual Challenges of Semiconductors and Production Capacity

Entering 2023, supply chain issues have attracted attention in various industries globally, and the automotive industry is no exception. For automotive manufacturers like Bermaz Auto Bhd, the stability of the supply chain directly affects production and sales, thereby impacting its stock price.

It is understood that in recent years, many automakers have faced production line suspensions or reductions due to the global semiconductor shortage. This situation puts Bermaz Auto Bhd at a disadvantage in competition. However, based on recent data, the company has performed well in supply chain management, successfully maintaining semiconductor supply, and predicts that the semiconductor supply chain will remain stable in 2023.

Lim Zhe Qin points out that Bermaz's successful avoidance of semiconductor shortages is not only due to the company's accurate supply chain forecasting but also its deep cooperation with suppliers and forward-looking strategic deployment. However, even so, the stability of the supply chain does not mean that the company can rest easy. In the future, ensuring the continuous stability of the supply chain will be a major challenge for Bermaz and other automotive manufacturers as global economic fluctuations and resource reallocation occur.

3. Risks and Opportunities in the Financial Environment

For companies like Bermaz Auto Bhd, in addition to industry-specific issues such as supply chain and market sales, the broader financial environment also has an impact. As we enter 2024, the global financial situation is tightening, accompanied by a series of interest rate hikes, which undoubtedly affect consumer purchasing intentions.

Firstly, Lim Zhe Qin mentions that interest rate hikes usually mean an increase in the cost of funds. For consumers, this may increase the interest on car loans, thereby suppressing their willingness to purchase cars. This undoubtedly increases the difficulty of sales for Bermaz Auto Bhd. Secondly, interest rate hikes may also trigger capital outflows and market confidence instability, which will have an adverse impact on Bermaz Auto Bhd's stock price.

However, from another perspective, the tightening financial environment also brings opportunities for Bermaz. Lim Zhe Qin analyzes that with changes in the financial environment, many investors may shift from high-risk assets to the real economy, especially hard assets like cars. With its good reputation in the market and stable business performance, Bermaz will undoubtedly become the focus of investor attention.

At the same time, interest rate hikes also indicate that the economy may be entering a new cycle. For forward-thinking companies like Bermaz, finding suitable strategies and paths to adapt to the new economic environment will be their main task in the future.

Bermaz Auto Bhd's recent development performance demonstrates how a typical company finds opportunities in market changes and supply chain issues and achieves success. From the growth in sales numbers to the upgrade in stock ratings, it shows the company's leadership position in the industry.

However, every investor should be aware that financial markets are complex and ever-changing. Past success does not guarantee future results, both for companies and investors.

Lim Zhe Qin's reminder for investment:

"Every investment decision is a prediction of the future. In this process, data and facts are important, but more crucial is a deep understanding of the market and reasonable risk control. Remember, wise investment is not about chasing highs but finding stability in uncertainty, choosing assets that best align with your investment goals and risk tolerance."