RAM Ratings affirms AA3/P1 ratings of Bermaz's Islamic programmes

RAM Ratings has affirmed the respective P1 and AA3/Stable ratings of Bermaz Auto Berhad's (Bermaz or the Group) Islamic Commercial Papers (ICP) Programme (2020/2027) and Islamic Medium-Term Notes (IMTN) Programme. The two issues have a combined limit of RM500 mil. 

Bermaz's issue ratings are supported by the Group's established niche in the affordable premium segment as well as its robust financial profile and cashflow generation ability. These factors will allow it to ride out the impact of slower sales due to competition from new Chinese entrants and an anticipated moderation of future total industry volume (TIV). 

Bermaz reported another positive year in FY Apr 2024, underscored by healthy demand for Mazda completely knocked down (CKD) models like the CX-5 and CX-30 and a strong post-pandemic economy which boosted the Group's pre-tax profit by 14.26% y-o-y to RM483.66 mil. Its performance in 1H FY Apr 2025, however, fell short in view of competition from aggressive promotion strategies of Chinese marques, a slower lineup release timeline and tapering consumer demand. Pre-tax profit was down a substantial 41.2% y-o-y at RM154.82 mil as a result. 

Given the Group's sluggish first half performance, we expect sales to be lower than their FY Apr 2024 peak for the rest of the current fiscal year on account of new model releases and seasonal year-end inventory clearance sales, notwithstanding changes in consumer sentiment and economic conditions. Mazda's market share remained within the 2% to 3% range in 2023 and 1H 2024, placing it fourth among non-national marques in Malaysia, behind Toyota, Honda and Mitsubishi. In August 2024, Bermaz introduced the XPeng G6 into its electric vehicle (EV) model lineup after entering into a distribution agreement with the marque earlier this year. Current G6 offerings come only as completely built units, at prices comparable to the Tesla Model Y. In November