RhB positive on Burmazz Auto’s plans to refresh the Kia brand

Kuala Lumpur: RHB Research is Bullish on Barmaz Auto Bhadi Because it plans to refresh the Kia brand and improve its after-sales service after its appointment by the principal.

The research house, which has a “buy” call on Burmese, noted that the distributor’s strategy included positioning the brand to avoid competition with more established makes.

“Kia Malaysia has indicated that it does not see Kia as a mainstream product, which we feel helps it avoid stiff competition with the national marque.

“We think Kia’s exciting new car lineup will appeal to the national markets and the customer segment sitting between the Japanese brands,” a report said.

Following the recent launch of the seven- and eight-seater CKD variants of the Kia Carnival, RHB said that the management of Burmaaz is excited at substantial pre-bookings for the vehicle, which is one of several new Kia vehicles in the line-up.

It noted that at a starting price of RM231,000, the Kia Carnival is a cheaper alternative to the Toyota Vellfire/Alfard.

“For now, 33%-owned Kia Malaysia will still import the 11-seater CBU Kia Carnival due to local production constraints and supply chain issues.

“However, Kia Malaysia plans to produce up to 5,000 units of the Kia Carnival Pa for both domestic consumption and export to ASEAN markets.

“Once production capacity can meet demand, it will stop importing CBUs. At least 40% of the cost material will be domestic to comply with the requirements.”

RHB said it had strong backlog orders for the Mazda, Kia and Peugeot brands since the end of June, but orders slowed meaningfully in July, as expected.

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It estimates total current backlog orders of around 12,000 across the three brands.

RHB is also more optimistic on Barmaz’s social responsibility initiatives, which prompted it to increase its environmental, social and governance (ESG) premiums from 2% to 4%, raising the target price to RM2.35.

Keeping in view the social responsibility, Barmaz is utilizing the reduced capacity at Inkom plant to manufacture CKD Kia Carnival and through downstream activities to create jobs in and around Inkom and minimize additional investment with incremental capex at around RM 30mil for CKD operations, it said. ,