KUALA LUMPUR: Kenanga Research maintained its outperform recommendation on MBM Resources Bhd
with a target price of RM3.45 as its 1Q19 core net profit of RM38mil came in within expectations.
According to Kenanga, the 16% year-on-year (y-o-y) growth in 1Q net profit was due to higher associate contribution and improved performance in the motor vehicles trading division.
Perodua's sales volume was 9% higher y-o-y at 60.659 units due mainly to new Myvi bookings and the all-new Perodua Aruz.
"Note that, the top three selling models in 1Q19 were Perodua’s Myvi, Axia and Aruz.
"On the other hand, volume for Volvo also increased with the addition of the XC-40 (CKD) which catered to wider market segment.
"However, consumer interest for Volkswagen appeared to have tapered down after the high demand during the GST tax holiday in 2018," said Kenanga.
In the auto parts segment, sales grew 3% y-o-y due to improved production efficiency from sustained production demand from carmakers to fulfil earlier back-orders and to replenish depleted stocks.
The segment's pre-tax loss was RM400,000 as compared to a pre-tax loss of RM3.8mil in 1Q18.
Kenanga is positive over MBM due to its deep value stake in 22.58%-owned Perodua and dual-income streams as the largest Perodua dealer and parts supplier for Perodua and other marques.
"Perodua has surpassed its 2018 target and targeting a stronger year in 2019 at 231,000 unit sales (+1.7%)," said the research house in its outlook.
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