PETALING JAYA: MBM Resources Bhd
is expected to continue enjoying strong earnings visibility, backed by a large order backlog of Perodua vehicles, says Kenanga Research.
The research house said Perodua had an order backlog of over 94,000 units and is targeting sales of 345,000 units this year.
Kenanga Research also favours MBM as a strong proxy to the mass-market Perodua brand, being the largest Perodua dealer in Malaysia.
In addition, MBM holds a 23% stake in Perusahaan Otomobil Kedua Sdn Bhd, the manufacturer of Perodua vehicles.
The research house highlighted MBM’s attractive dividend yield of around 10% and maintained its “outperform” call with a target price (TP) of RM6.90, based on a price-to-earnings ratio (PER) of eight times financial year 2025 (FY25) earnings per share.
This valuation represents a discount to the auto sector’s average forward PER of 11 times, due to MBM’s smaller scale.
Kenanga Research added that the discount also reflects MBM’s business model, which leans more toward auto dealerships, unlike other players in the sector that are more focused on manufacturing.
Similarly, HLIB Research has maintained its “buy” call on MBM with a TP of RM7.10, noting the company’s strong net cash position of 80.6 sen per share and its sustainable earnings and cash flow, driven by Perodua’s robust sales performance.
It added that Perodua is on track to meet its 2025 sales target of 345,000 units (versus 358,000 units in 2024) and production target of 350,000 units (versus 361,000 units in 2024).
The research house also said Perodua is expected to launch a new B-segment SUV model and an electric vehicle (EV) model by end-2025.
However, the group continues to face a slowdown in demand for its Volvo and Volkswagen models.
On a more positive note, HLIB Research noted that the group has recorded rising aftersales volume.
“The upcoming fuel cost rationalisation may further boost the demand for Perodua models, given the targeted segment is likely to continue to enjoy fuel subsidy. More consumers may down-trade their car choices to Perodua,” it added.
HLIB Research said the recent appreciation of the ringgit will benefit Perodua by lowering input costs.
On the other hand, TA Research remains cautious on the company’s outlook, maintaining a “sell” call on MBM with an unchanged target price of RM4.31, based on a 2026 PER of six times.
“We maintain our cautious stance on the group’s earnings outlook, given the moderating industry volumes, intensifying competition and persistent cost pressures that may continue to weigh on margins,” it added.
The research house expects Malaysia’s automotive market to stabilise in 2025, with total industry volume projected to decline.
“This signals a return to more normal conditions following a period of elevated demand, as the backlog of orders has largely been cleared.
“In a competitive environment, aggressive pricing and marketing strategies, heavy promotions are keys to maintain market share in both traditional and EV segments.
“While these could help retain customers, it would also compress margins and reduce profitability,” TA Research said.
It added that MBM’s ability to balance competitive pricing with operational efficiency and value-added offerings will be key to sustaining both market share and profitability in FY26.
