MBM Resources Berhad - Above Expectations
Mon, 02-Mar-2026 08:08 am
by Research Team • Apex Research

Counter

MBMR (5983)

Target Price (RM)

7.04

Recommendation

Buy

  • 4QFY25 CNP stood at RM100.6m (+13.0% QoQ, +21.9% YoY), bringing the 12MFY25 CNP to RM333.5m (5.0% YoY). The results came in above our (111%) and consensus (107%) estimates due to stronger-than-expected motor trading sales, supported by effective year-end campaigns and improved associate contributions.

  • The earnings expansion was supported by motor trading and assembly revenue growth of +18.2% QoQ, +11.2% YoY, auto parts revenue rising +13.8% YoY, and associate contributions increasing +16.2% YoY, partially offset by a 3.9% QoQ decline in motor trading PBT due to heavier promotional discounting.

  • We raise our FY26F/27F by 11.7%/14.5% to reflects higher sales assumptions across both the Motor Trading and Auto Parts divisions, alongside stronger projected contributions from associates and JVs.

  • Maintain our BUY recommendation with higher target price of RM7.04 (from RM6.30), by pegging at 8.0x P/E FY26F EPS of 88.0sen.

Results Above expectations. 4QFY25 core net profit (CNP) came in at RM100.6m (+13.0% QoQ, +21.9% YoY) after excluding a realised forex gain of RM0.1m, lifting 12MFY25 CNP to RM333.5m (+5.2% YoY). The results exceeded both our forecast (111%) and consensus (107%). The outperformance was primarily driven by stronger-than-expected motor trading sales during year-end campaigns, coupled with firmer associate contributions. 

 

Dividend. No dividend declared for the quarter. DPS for FY25 amounted to 39.0sen (FY24: 54.0sen).

 

QoQ. CNP rose 13.0% QoQ alongside a 15.9% increase in revenue, driven by an 18.2% uplift in motor trading and assembly revenue on stock-clearing campaigns. However, operating leverage was partially capped by margin compression. Motor trading PBT declined 3.9% QoQ due to heavier discounting and promotional intensity, tempering the earnings uplift from stronger sales volumes.

 

YoY. CNP increased 21.9% YoY, supported by broader-based revenue growth across motor trading and assembly (+11.2%) and auto parts (+13.8%), alongside a 16.2% increase in associate contributions. Growth was underpinned by resilient demand across core segments despite softer industry production conditions and elevated promotional activity during the year-end period.

 

YTD. 12MFY25 CNP grew 5.0% YoY, outperforming the 0.7% YoY increase in Total Industry Volume (TIV). The uplift was driven by revenue expansion in motor trading (+1.6%) and auto parts (+9.5%), as well as stronger associate contributions (+5.9%). However, operating margins softened, with auto parts PBT declining 13.2% YoY amid a 5.4% contraction in TIP and weaker margins, while motor trading PBT fell 8.4% YoY due to intensified competition and sustained discounting on mature models.

 

Outlook. Following Malaysia’s record Total Industry Volume (TIV) of 820,752 units in 2025, we expect industry volumes to normalise to 780,000 units in 2026F (-5% YoY) as demand moderates from a high base. Despite the anticipated moderation in TIV, we expect MBMR to deliver structurally resilient earnings, underpinned by Perodua’s dominant market positioning, healthy order backlog and recurring associate contributions, which should mitigate the impact of softer industry volumes. The Auto Parts division is positioned for gradual recovery, supported by improved OEM production schedules and ongoing operational efficiencies. While competitive pressures may weigh on margins within the non-national segment, we believe earnings downside is cushioned by MBMR’s diversified revenue base and strong associate income visibility.

 

Earnings Revision. Following the earnings outperformance, we raise our FY26/27F forecasts by 11.7%/14.5% to RM343.9m/RM360.0m (from RM307.8m/RM314.3m). The upgrade reflects higher motor trading volume assumptions, a firmer auto parts revenue outlook, and stronger projected contributions from associates and JVs.

 

Valuation. We maintain our BUY recommendation with a higher target price of RM7.04 (from RM6.30), based on 8.0x FY26F EPS of 88.0 sen. Our 8.0x valuation implies a c.10% discount to the 2026F sector average P/E of 8.9x, reflecting margin normalisation and competitive intensity risks. We continue to favour MBMR for its (i) strong market positioning via Perodua, (ii) diversified earnings base across vehicle trading and parts, and (iii) consistent associate contributions providing earnings visibility.

 

Risk. US tariff revisions and ongoing trade negotiations have heightened global uncertainties, with potential spillovers to raw material costs, FX volatility, and domestic demand. 

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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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