MBM Resources Berhad - Perodua Set to Drive Future Growth
Tue, 26-Nov-2024 07:13 am
by Amir Hamdan • Apex Research

Counter

MBMR (5983)

Target Price (RM)

6.67

Recommendation

Hold

Summary

  • 9MFY24 core net profit improved to RM292.0m, up +1.4% yoy, driven by a 19.3% yoy increase in Perodua sales volume came above our expectations at 110.9% of in-house estimates and 101.3% of consensus expectations. 

  • We raised our CNP forecast for FY24-26 by +6.8%/+6.3%/+6.4% to account for the stronger-than-expected demand for Perodua.

  • We maintain our HOLD recommendation, but with a higher target price of RM6.67 based on 8.0x pegged to FY25F EPS of 8.3 sen as recent share price appreciation has reflected its fundamentals.

     

Results Review

  • Results review. MBMR’s 3QFY24 core net profit (CNP) improved +1.4% yoy, but slipped -14.0% qoq to RM107.6m, propelled by a 4.7% rise in sales volume, fueled by high demand for Perodua vehicles. Despite sales volume for Volvo and VW remained sluggish, the segment’s aftersales revenue and margins remained stable with a further 4.5% yoy increase in aftersales revenue.

 

  • Results exceeded expectations.9MFY24 CNP of RM292.0m exceeded our expectations, reaching 110.9% of our previous full-year estimate of RM263.4m, as well as above consensus expectations at 101.3% of RM288.2m. The variance was primarily driven by better-than-expected Perodua sales%.

 

  • Operations Highlights. Motor trading and assembly segment revenue of RM1.60bn marked a +7.9% yoy increase RM1.71bn from 9MFY23. Growth was mainly fueled by a +19.3% yoy rise in Perodua sales volume and a +7.4% yoy improvement in aftersales performance. However, gains were partially offset by lower volumes in Volkswagen and Volvo, reflecting softer premium segment demand, and ongoing challenges in Daihatsu vehicle sales.

 

  • Industry Highlights Total Industry Volume (TIV) reached 664,002 units in 10M24, reflecting a YTD growth of +2.4%, driven primarily by sustained consumer demand. For Oct 24, TIV added 20.4% mom to 69,859 units, anchored by positive impact from year-end promotional campaigns.

 

  • Outlook. The automotive sector is poised for intensified competition, following the numerous new model launches expected from 2Q24 onwards. Additionally, the planned increase in goods value tax may exert further pressure on the luxury vehicle segment, which is already experiencing a significant sales slowdown.

 

  • Valuation. We raised our earnings forecast for FY24-26 by +6.8%/+6.3%/+6.4% to account for the stronger-than-expected demand for Perodua. We maintain our HOLD recommendation, but with a higher target price of RM6.67 as recent share price appreciation has reflected fundamentals.

 

  • Risk. Soft consumer sentiment and unattractive model launches are risks to its motors division

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Disclaimer

The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.

Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

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