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 reaffirmation of the ratings is premised on our expectation that Bermaz will be able to maintain its strong financial position amid the pandemic. Anticipated improvements in Bermaz's operational performance over the medium term will be supported by new model rollouts under its Mazda marque as well as its newly acquired Peugeot and Kia distributorships.

Backing the ratings are Bermaz's established niche in the affordable premium segment, its asset-light business model and superior financial profile. Defying the pandemic-induced slowdown in the automobile industry since 2020, Bermaz sustained impressive growth in revenue and vehicle sales in the past fiscal year, aided by the sales tax exemption on passenger cars. Mazda vehicle sales came in at 14,685 units in FY Apr 2021 (+25.4% y-o-y), generating a turnover of RM2.29 bil (+30.3% y-o-y) for Bermaz. Its operating profit before depreciation interest and tax surged 41.5% y-o-y to RM136.03 mil (FY Apr 2020: RM96.11 mil). Owing to its asset-light strategy, Bermaz has stayed profitable every quarter since the start of the pandemic. 

Mazda's market share was stable in 10M 2021 at 2.1% (2020: 2.3%), allowing the Group to retain its fourth position among non-national marques in Malaysia, behind Honda, Toyota, and Nissan. As the reinstatement of control measures in May 2021 led to underwhelming vehicle sales in 1H FY Apr 2022, we expect Bermaz to achieve higher monthly vehicle sales for the remainder of the fiscal year, given the extension of the sales tax exemption to June 2022. The Group does not expect any major supply disruptions for Mazda arising from the global chip shortage and will continue ramping up vehicle deliveries to fulfill its o