MBM Resources Berhad - Well Positioned For Better Times Ahead
Fri, 28-Feb-2025 07:34 am
by Amir Hamdan • Apex Research

Counter

MBMR (5983)

Target Price (RM)

6.54

Recommendation

Buy

Executive Summary

  • MBMR’s 4QFY24 core net profit dropped -6% yoy and +3.5% qoq to RM660.9m, bringing FY24 CNP at RM2,42bn, which was above expectations accounted for 124% and 122% of ours and consensus expectation respectively.

  • We raised our earnings forecast for FY25-26 by +2.7%/+1.5% to account for the stronger-than-expected demand for Perodua and Jaecoo.

  • We upgrade our recommendation to BUY, but with a lower target price of RM6.54 based on P/E multiple of 8.0x to rolled over FY26F EPS of 81.8 sen.

 

Results above expectations. FY24 CNP stood at RM412m (+0.8% yoy) came above expectations, accounting to 124%/122% of ours and consensus forecasted CNP at RM331m/RM377m respectively.  The difference was primarily driven by Perodua sales and new addition Jaecoo model. 

 

YoY. 4QFY24 CNP dropped -0.8% yoy to RM120m, primarily due to lower Perodua vehicle supply towards year-end and weaker Volkswagen sales amid the absence of new model launches. Meanwhile, Daihatsu’s commercial vehicle segment remained under pressure, constrained by limited model offerings. Meanwhile, revenue fell -5.6% yoy to RM660.0m.

 

QoQ. CNP added +11.5% qoq, primarily driven by year-end promotional activities. The Motor Trading and Assembly Division recorded RM580.7m in revenue, increase 4.1% qoq to RM22.6m, supported by higher vehicle sales and aftersales contributions.

 

Outlook. Looking ahead to FY25, MBMR’s earnings growth will be driven by sustained Perodua sales, strong contributions from its auto parts division, and cost optimisation efforts. Perodua’s market leadership and steady demand will support vehicle sales, while the auto parts segment benefits from higher production volumes and efficiency improvements

 

Earnings Revision. We trimmed our FY25F and FY26F earnings by -2.9% and -4.1% respectively to account for the stiffer competition in the overall automotive industry with the mushrooming of Chinese brand makers lately.

 

Valuation. Following the weakness in share price lately, we upgrade our recommendation on MBMR to BUY, but with a revised target price of RM6.54 (from RM6.67), by pegging a 8.0x P/E multiple to rolled-over FY26F EPS of 81.8 sen and 0% ESG factored premium/discount based on three-star ESG rating.

 

Risk. Global trade tensions and tariff impositions among major economies may lead to raw material price volatility, supply chain disruptions, and inflationary pressures.

Read more details in:

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.

Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.

Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.425747 4.460392
EUR 4.895220 4.904713
CNY 0.606938 0.608107
HKD 0.568828 0.573311
SGD 3.311739 3.338136