RAM Ratings reaffirms P1 and AA3 ratings of Bermaz’s ICP and IMTN programmes

Published on 22 Dec 2022.

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

The ratings are supported by Bermaz’s established niche in the affordable premium segment, its asset-light business model and superior financial profile. In an industry adversely impacted by the pandemic since 2020, Bermaz has managed to sustain impressive growth in profitability while preserving its market share and vehicle sales, despite a lower total industry volume in 2021. The Group’s operating profit before depreciation interest and tax surged 39.9% y-o-y to RM190.33 mil in FY Apr 2022, backed by broader margins from the larger proportion of completely knocked down (CKD) vehicles sold. Its asset-light strategy has kept Bermaz profitable every quarter throughout the pandemic.

Mazda’s market share was stable in 10M 2022 at 2.1% (2021: 2.1%), ranking fifth among non-national marques in Malaysia, behind Honda, Toyota, Mitsubishi and Nissan. Propped up by the extended sales tax exemptions and a higher sales contribution from Mazda Philippines, PEUGEOT and Kia, the Group’s vehicle sales were overwhelming in 1H FY Apr 2023 (+81.9% y-o-y). We expect Bermaz to uphold its sales trajectory for the remainder of the fiscal year, as the Group continues ramping up vehicle deliveries to fulfil its order backlog.

Bermaz’s balance sheet and liquidity remain robust. A higher debt level of RM287.84 mil as at end-April 2022 (2021: RM274.85 mil) had not affected the Group’s net cash position. Cash reserves of RM661.99 mil as at end-July 2022 comfortably exceed short-term obligations of RM112.73 mil. The Group’s debt protection metrics strengthened further in FY Apr 2022, seen in an improved funds from operations debt coverage of 0.80 times (FY Apr 2021: 0.64 times). Its strong financial position will help the Group navigate industry-wide supply disruptions and semiconductor shortages over the near term.

Bermaz expects minor capital expenditure and investments in the next three years, amounting to RM8.0 mil per annum, for the refurbishment and expansion of Mazda, PEUGEOT and Kia showrooms. As these will be funded by internal cashflow generation, we expect Bermaz to stay in a net cash position. Bermaz will continue revitalising both the PEUGEOT and Kia marques to restore consumer confidence in the brands through improved service standards at dealerships, better warranty support, and the rollout of new and facelifted completely built up and CKD models in the coming years.

Constraining the ratings are franchise renewal risk, the increasingly competitive and rapidly evolving business environment, and the Group’s vulnerability to economic cycles and changes in regulatory policy. The key Mazda CX-5 model poses concentration risk, accounting for a substantial portion of overall sales. 


Analytical contacts
Zachary Tan
(603) 3385 2612

Thong Mun Wai
(603) 3385 2522


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

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Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

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