KUALA LUMPUR: A disposal of MBM Resources Bhd
's loss-making allot wheel manufacturing business would help boost the group's earnings, says Kenanga research.
"For illustrative purposes, post-disposal, minus the plant losses, this will boost our FY19E NP by 16%, and in turn raise our TP to RM3.40 (from the current RM2.90)," said Kenanga.
At present, the research house estimated losses after tax for the unit, Oriental Metal Industries (M) Sdn Bhd, at RM27.6mil for FY18 and RM23mil for FY19.
The research house is positive on the news that MBM is looking for a buyer for the unit as a previously planned turnaround via a tie-up with Chinese alloy wheel maker Citic Discatal had fallen through.
The group had made an initial investment of RM103mil on the plant, which had been impared down to RM46.7mil as at Dec 31, 2017.
Kenanga noted that the breakeven point for the investment is still dar away due to high rejection rates, production inefficiencies and a low utilisation rate of the plant.
Meanwhile, it said Perodua has surpassed its target of 209,000 units in 2018 to close at 227,243 units
It expects better sales in the coming quarters due to the all-new Perodua Myvi and all -new Perodua Aruz.
"The all-new Perodua Myvi booking has hit 120k units, with 100k delivered, while all-new ARUZ garnered 2.2k booking starting early Jan 2019.
"Moving forward, the Motor Trading Division will benefit from stronger margin sales from the Volvo premium segment and the strong market reception of the Perodua affordable variants," it said.
Pending further announcements, Kenanga maintained its earnings estimates for FY18-19 and outperform call on the counter with an unchanged target price of RM2.90.
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