KUALA LUMPUR: As Bermaz Auto Bhd 's earnings results come in line with estimates, analysts say the auto distributor is expected to chart stronger earnings in subsequent quarters on the back of the economic recovery.

       According to Hong Leong Investment Bank (HLIB) Research, Bermaz Auto is expected to leverage the extended sales and service tax (SST) exemptions until June 2022 and the recovery of the economy as the country transitions to the endemic stage.

       The group will also be launching some new car models to drive sales while clearing an order backlog for certain models.

       "The current outstanding orders for Mazda marque is c.3.5k units, indicative of 2.0-2.5 months delivery backlog.

       "The Malaysia operations is also expected to leverage onto the newly launched Peugeot new 2008, 3008 facelift and 5008 facelift and Kia marque for growth in 2022," it said in a report.

       In the Philippines, the group's operations is expected to recover following the easing of movement restrictions, which will allow economic activities to operate at full capacity.

       For the recent 9MFY22 results, the research house deemed the group's core profit after tax and minority interest (Patmi) of RM82.8mil within expectations at 55.4% of its full-year estimate and 62.5% of that of consensus.

       HLIB maintained its "buy" recommendation on Bermaz Auto with a higher target price of RM1.95 based on a higher 2022 price-earnings of 14 times.

       Meanwhile, Kenanga Research said it expects seasonally stronger sales in the fourth quarter of Bermaz Auto's financial year, especially after the Chinese New Year holiday.

       In addition, there will be a higher delivery of CBU units expected by April from earlier supply disruption, it said.

       The research firm maintained "market perform" on the share with a target price of RM1.65 based on 15 times forecast FY22 earnings per share.