Bermaz Auto Bhd's award of distributorship rights for Deepal electric vehicles (EVs) in Malaysia has prompted RHB Investment Bank Bhd (RHB Research) to maintain its BUY call on the company. The research house has set a target price of RM3.05 for the company's share, reflecting a 49% upside potential.

Despite the addition of the Deepal distributorship, RHB Research does not foresee a significant impact on Bermaz's bottom line as the distributor is expected to add more EV options to Bermaz's offerings, but the scale of Deepal's contribution to overall sales is likely to be minimal.

Furthermore, Bermaz's entry into the EV sector through Deepal may not significantly move the needle in Malaysia's small EV market, which represents only 2% of total car sales in the country.

Despite the limited impact expected from Deepal, Bermaz's valuation remains attractive, trading at a price-to-earnings ratio of 7.7 times for FY25F, which is lower than its historical mean of nine times. Furthermore, Bermaz continues to offer an attractive dividend yield of approximately 11%, which makes it an appealing option for investors seeking stable returns.and attractive valuation.