Bermaz Auto Bhd

• BAUTO may extend its upward trajectory after it broke out from its 3-week bullish rectangular pattern with a long white candle. The positive crossover of its 20-day EMA above the 50-day EMA further enhances the near-term positive momentum.

• We expect the rising momentum is set to steer the stock higher and test the next level of resistance of RM2.60 (R1) and RM2.90 (R2) in the near term.

• On the downside, stop-loss is set at RM2.21, below the 14 Sep’s low.

• Fundamentally, we like BAUTO for its robust earnings visibility, supported by a substantial order backlog. Prospective growth is reinforced from new launches and a rising CKD mix. The anticipation of a robust CKD:CBU ratio of 85:15 in the upcoming quarter, supported by solid ties with its Japanese counterpart, strategically positions BAUTO for sustained growth as it targets the achievement of its FY24F sales of 20k units, primarily propelled by the success of Mazda CX-5 and CX-30 models.

Source: Rakuten Research - 26 Jan 2024

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