MBM to be supported by Perodua’s high sales

PETALING JAYA: MBM Resources Bhd expects growth to continue to be supported by its 20%-owned Perusahaan Otomobil Kedua Sdn Bhd’s (Perodua) ability to hit a higher sales target amidst the easing of headwinds in manufacturing, says analysts.

Kenanga Research remains optimistic Perodua will end 2023 with another sales record of 314,000 units (up by 11.3%).

It said manufacturing margins will potentially see a boost on the back of easing input costs and supply constraints, and efficiency gains from high production volumes of new models.

“The current new bookings of 35,000 to 40,000 per month have already surpassed pre-pandemic levels.

“MBM believes the worst of margin squeeze at both of its manufacturing segment and associate, Perodua, is over,” the research house said in a report.

Kenanga Research said Perodua’s manufacturing segment profit doubled despite registering a 8% quarter-on-quarter decline in unit sales to 78,564 units.

“MBM indicated that metal prices, freight cost, US dollar/ringgit exchange rate, and supply constraints at key local part suppliers have since stabilised to a more favourable level, with further boost from the ending of prosperity tax.

“Additionally, higher production level from all-new Perodua Axia helps to run down the high-cost inventories at a much faster rate,” said the research house.

As part of cost-sharing arrangements from sudden jump in materials costs in the fourth quarter of the financial year 2022 (4Q22), MBM received RM5mil in one-off costs recovery from its original equipment manufacturing customers (Daihatsu, Perodua and Proton) in 1Q23.

Kenanga Research said MBM echoed Perodua’s record sales guidance for 2023 of 314,000 units, adding that the production target of 330,000 units (up by 14.1%) set by Perodua is achievable.

“Perodua has the highest localisation rate of 95% in the automotive industry and its production is running smoothly at maximum capacity, with minimal supply-chain interruptions.

“Perodua Manufacturing and Perodua Global Manufacturing’s combined capacity is 320,000 units,” the research house said.

Kenanga Research stated further volume expansion is in the pipeline riding on improved productivity and higher overtime.

“MBM shared that the all-new Axia is still receiving overwhelming reception and the Perodua production line is not affected by the recent news on Daihatsu’s crash test issue in Japan.

“Perodua will release two more face-lifted models this year and is committed to one new model each year which could be officially launched in early 2024 (B-segment model),” said the research house.

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