KUALA LUMPUR: Kenanga Research has maintained Market Perform on MBM Resources Bhd
with an unchanged target price of RM2.20.
THe research firm said the the group's 9M17 core profit after tax and minority interests (Patami) of RM53.7mil excluding the impairment on goodwill accounted for 69% and 66% of its and consensus full-year estimates.
"However, the performance is deemed within expectation in anticipation of stronger associates’ contribution in 4Q17 from the launch of third-generation Perodua Myvi and sales boosting year-end promotional events," it said.
Year-on-year, 9M17 revenue increased 5% due to stronger performance from the motor vehicles trading segment.
Auto parts manufacturing segment sales increased 7% driven by higher production volume in tyre assembly and wheel manufacturing plants.
However, core profit before tax plunged 24% due to widened losses in the auto parts manufacturing segment on below optimal production levels at the alloy wheel plant and lower earnings contribtuion from Perodua.
"While we believe the Motor Trading Division will benefit from the strong market reception of the Perodua affordable variants, challenges will still persist from: (i) higher import and operating costs on unfavourable currency fluctuations, and (ii) strict hire-purchase approvals," said Kenanga Research.
"The Auto parts manufacturing division is estimated to break even in FY18 with sales volume for alloy wheels expected to achieve at least 50% of the maximum capacity at c.375k units (maximum capacity at 750k units).
"Perodua maintains its 202k units target for FY17, with expected volume boost in 4Q17 with the launch of third-generation Perodua Myvi."
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