Mbm Resources Bhd

$MBMR / 5983 (MBM RESOURCES BHD)
Research Report by Kenanga

$MBMR / 5983 (MBM RESOURCES BHD)
Research Report by MAYBANK

$MBMR / 5983 (MBM RESOURCES BHD)
Research Report by HLIB

$MBMR / 5983 (MBM RESOURCES BHD)
Research Report by TA

$MBMR / 5983 (MBM RESOURCES BHD)
Research Report by RHB

$MBMR / 5983 (MBM RESOURCES BHD)
Research Report by HLIB

$MBMR / 5983 (MBM RESOURCES BHD)
Research Report by APEX

$MBMR / 5983 (MBM RESOURCES BHD) moved

$MBMR / 5983 (MBM RESOURCES BHD)
Research by RHB
Neutral - TP RM5.95

"Another Record-Breaking Year Likely For Perodua"

MaintainNEUTRALwithahigherMYR5.95TP,1%upside.Wecameaway from MBM Resources’ 1H24 analyst briefing feeling more bullish on the outlook for Perodua, its major earnings contributor. While we anticipate higher YoY earnings for MBM this year, we believe valuation is now fair as share price has risen 39% YTD. However, we advise investors to hold their positions given its handsome c.9% FY25F yield.

Analyst:
Syahril Hanafiah
syahril.hanafiah@rhbgroup.com

$MBMR / 5983 (MBM RESOURCES BHD)
Research by Kenanga
Outperform - TP RM6.30

"Twin Thrust Perodua & Jaecoo"

MBMR is optimistic for another record year for Perodua vehicle sales, topping the 330k units sold last year. Its newest brand under its stable, Jaecoo, has received overwhelming responses and will be expected to boost volume and distribution margins in the remaining quarters of FY24. We maintain our forecasts, TP of RM6.30 and OUTPERFORM call. The stock offers attractive dividend yield of about 7%.

Analyst:
Wan Mustaqim Bin Wan Ab Aziz
wanmustaqim@kenanga.com.my

$MBMR / 5983 (MBM RESOURCES BHD)
Research by HLIB
Buy - TP RM6.80

"Strong performance to hold up"

MBMR reported strong core PATMI of RM148.1m for 1HFY24 (+12.1% YoY), in tandem with strong Perodua sales and production volume. We expect the performance to sustain into 2H24, supported by the still strong demand for Perodua, driven by its order backlogs of +100k units, while new order intakes remains healthy. Perodua has indicated sales target to sustain at 330k units in 2024. Maintain BUY on MBMR with a higher TP of RM6.80 (from RM6.50) based on 10% discount to SOP (RM7.61). Raised earnings forecast for FY24/FY25/FY26 by 13.1%/1.6%/1.6% and dividend payout for FY24 to 28 sen/share (from 24 sen/share).

Analyst:
Daniel Wong
kkwong@hlib.hongleong.com.my

$MBMR / 5983 (MBM RESOURCES BHD)
Research by TA
Sell - TP RM4.70

"Uncertain Outlook and Overvalued"

MBM Resources Berhad (MBM) conducted an analyst briefing yesterday following the release of its 2QFY24 results. Management remains cautiously optimistic about the outlook for 2025, as the automotive sector is navigating a complex landscape of regulatory changes, strategic shifts, and evolving market dynamics, which introduce considerable uncertainty. Despite this, as a proxy for Perodua, MBM will continue leveraging the company’s growth in 2024. However, we believe the share price has run ahead of its fundamentals and that most of the positive news have already reflected in the share price. Thus, we maintain a Sell rating on MBM, with an unchanged target price of RM4.70 per share, based on a CY25 PER of 7x.

Analyst:
Angeline Chin
angelinechin@ta.com.my

$MBMR / 5983 (MBM RESOURCES BHD)
Research by RHB
Neutral– TP RM 5.30

"Solid Dividend Yielder”

Maintain NEUTRAL, new MYR5.30 TP from MYR4.70, 7% downside. 1H24 earnings met our and but missed Street estimates. We believe Perodua sales will continue to drive MBM Resources’ future earnings. Despite anticipating a softer FY25 earnings outlook, we recommend investors hold their positions in MBM for its attractive c.7% FY25F yield.

Analyst:
Syahril Hanafiah
syahril.hanafiah@rhbgroup.com

$MBMR / 5983 (MBM RESOURCES BHD)
Research by HLIB
BUY – TP RM6.50

"Strong 1H with surprise dividend”

MBMR reported core PATMI RM67.8m for 2QFY24 (-15.5% QoQ; +30.1% YoY) and RM148.1m for 1HFY24 (+12.1% YoY), above our expectation (59.7%), and consensus (54.4%). We expect MBMR to continue to leverage on the strong Perodua sales into 2HFY24, given the still high order backlogs of over 100k units and still healthy new order intakes. Perodua is expected to launch a new B-Segment SUV model and a facelift model in 2H24. Maintain BUY on MBMR with an unchanged TP: RM6.50 based on 10% discount to SOP of RM7.18. We expect potential upside for our assumed dividend of 24 sen for FY24-26.

Analyst:
Daniel Wong
kkwong@hlib.hongleong.com.my

$MBMR / 5983 (MBM RESOURCES BHD)
Research by Maybank
HOLD – TP RM5.86

"2Q24: Results inline”

MBM's 1H24 results were in line, meeting 49%/54% of ours/consensus fullyear estimates. We maintain our forecasts but raise our TP by 25% to MYR5.86 (based on 7.5x FY25E EPS, +1SD to 5Y mean, vs. 6x (mean) previously). Perodua (P2) sales remain strong after two consecutive record years, with a 17% YoY growth in 1H24 and a sustained huge backlog of c.100k units. We believe P2 is on track for another record year. Our +1SD valuation peg reflects MBM’s upside potential as a proxy to the OEM, given its 3-tier exposure as a shareholder, dealer, and auto parts supplier. Maintain HOLD on balanced risk-reward.

Analyst:
Loh Yan Jin
lohyanjin.loh@maybank-ib.com

$MBMR / 5983 (MBM RESOURCES BHD)
Research by TA
SELL– TP RM4.70

"Earnings Driven by Associates”

Maintain SELL on MBMR with an unchanged TP of RM4.70/share, based on CY25 PER of 7x.

Analyst:
Angeline Chin
angelinechin@ta.com.my

$MBMR / 5983 (MBM RESOURCES BHD)
Research by APEX
HOLD – TP RM 5.36

"Perodua set to propel growth”

• MBMR recorded CNP of RM66.7m (+31.8% yoy, -15.7% qoq) in 2QFY24, bringing 1HFY24 CNP to RM145.9m (+13.0% yoy), which was above our expectations at 60% but within consensus expectation at 54%. The variation was mainly stemmed from higher-than-expected P2 sales which exceeded our forecasts by +12.4%.
• We raised our earnings forecast for FY24-26 by +6.8%/+6.3%/+6.4% to account for the stronger-than-expected demand for P2.
• We upgrade our recommendation to HOLD (from SELL) with a higher target price of RM5.36 with forward PE of 7.7x (from 7.1x) on EPS of 70.0 sen after rolling forward our valuation metrics to FY25.

Analyst:
Steven Chong
stevenchong@apexsecurities.com.my

$MBMR / 5983 (MBM RESOURCES BHD)
Research by MIDF
NEUTRAL – TP RM4.90

"Results Right on Target"

• 2QFY24 results were within our expectations
• Perodua sees strong demand with double-digit increase in unit sales
• Volvo and Volkswagen sales remain subdued; Daihatsu’s commercial vehicle sales struggle with model limitations
• Maintain NEUTRAL with a revised TP of RM4.90

Analyst:
MIDF Research Team
research@midf.com.my

$MBMR / 5983 (MBM RESOURCES BHD)

AUTOMOTIVE
$MBMR / 5983 (MBM RESOURCES BHD)
Research by Kenanga
Neutral

“No-Frills Vehicles in Pole Position”

We remain NEUTRAL on the sector. We also maintain our projection for industry-wide sales volume, also known as total industry volume (TIV), of 740k units (-8%) in CY24, in line with the forecast of Malaysia Automotive Association (MAA). We believe while it will be business as usual for the affordable segment, fuel subsidy rationalisation will likely hurt the demand for mid-market models, giving rise to a two-speed automotive market locally in CY24. In general, the industry’s earnings visibility is still good, backed by a booking backlog of 200k units. Our sector top pick is MBMR (OP; TP: RM6.30), a good proxy to the affordable and fuelefficient Perodua brand. It also offers an attractive dividend yield of about 7%.

Analyst(s):
Wan Mustaqim Bin Wan Ab Aziz
wanmustaqim@kenanga.com.my

Automotive Production & Sales Data (May 2024)

Looking at May 2024 figures, the total industry volume (TIV) / Sales for Jan-May 2024 period was 8% higher than the similar corresponding period in 2023, whereas production also continues to be robust at 12% higher vs 2023 same period. This increase is mainly driven by the Passenger Vehicle (PV) segment, as compared to Commercial Vehicle (CV) where both production and sales has declined.

For the first 5 months of 2024, total production has risen 12% to 341k units (vs 2023 at 304k). Breaking down the YTD numbers, PV continues to have strong growth at 13% increase of 323k units produced, whereas there’s a decline of -5% for production of CV.

For the first 5 months of 2024, total sales have risen 8% to 328.9k units (vs 2023 at 303.5k). Breaking down the YTD numbers, PV continues to have growth at 11% increase of 301k units in sales, whereas there’s a decline of -15% for sales of CV.

Based on news citing Malaysian Automotive Association (MAA), local car sales in June’24 are expected to remain at the same level as in May’24.

Besides the usual $BAUTO / 5248 (BERMAZ AUTO BERHAD), DRBHCOM, $MBMR / 5983 (MBM RESOURCES BHD), UMW, car parts manufacturer also would benefit from this continuous increase in vehicle sales, such as $FEYTECH / 5322 (FEYTECH HOLDINGS BERHAD) $PECCA / 5271 (PECCA GROUP BERHAD) APM to name a few, and Spare Parts Supplier such as $NHFATT / 7060 (NEW HOONG FATT HOLDINGS BERHAD).

I must admit that I’ve underestimated how much Malaysians like buying new cars… there are really A LOT of cars on the road right now. Makes me wonder how many actually withdrew from their EPF 3 just to buy a new car.

Previous discussion on Feb 2024 Automotive Sales: https://cutt.ly/IesXY43h

AUTOMOTIVE
$MBMR / 5983 (MBM RESOURCES BHD)
Research by Kenanga
Neutral

“Back in Full Force in May 2024”

New vehicle sales in Malaysia, also known as total industry volume (TIV), soared 18% MoM to 68,665 units in May 2024 as deliveries rose in lockstep with higher production in the absence of major festive holidays. With 5MCY24 TIV making up 44% of our full-year projection of 740k units (-8% YoY), we consider the number meeting our expectation. We believe while it will be business as usual for the affordable segment, fuel subsidy rationalisation will likely hurt the demand for mid-market models, giving rise to a two-speed automotive market locally in CY24. In general, the industry’s earnings visibility is still good, backed by a booking backlog of 200k units. Our sector top pick is MBMR (OP; TP: RM6.30) which is a good proxy to the affordable and fuel-efficient Perodua brand. It also offers an attractive dividend yield of about 7%.

Analyst(s):
Wan Mustaqim Bin Wan Ab Aziz
wanmustaqim@kenanga.com.my

$BAUTO / 5248 (BERMAZ AUTO BERHAD)
$MBMR / 5983 (MBM RESOURCES BHD)

AUTOMOTIVE
$MBMR / 5983 (MBM RESOURCES BHD) $BAUTO / 5248 (BERMAZ AUTO BERHAD) $SIME / 4197 (SIME DARBY BERHAD)
Research by TA
Neutral

“TIV Rebounded in May”

According to the Malaysian Automotive Association (MAA), the Total Industry Volume (TIV) of vehicles increased by 18.4% MoM to 68.7k units in May-24. This rise can be attributed to longer working days following the Hari Raya festivities. Compared to the same period last year, TIV saw an 8.7% YoY increase, primarily driven by a surge in passenger car sales, which rose by 11.4% (refer to Figure 1). YTD, TIV has reached 328.9k units, marking an 8.3% increase from the previous year. This growth was mainly driven by strong performance in the passenger car segment, which grew 11.0% to 301.1k units. Meanwhile, the commercial vehicle segment declined to 27.8k units, down by 14.7% YoY.

Analyst(s):
Angeline Chin
angelinechin@ta.com.my

AUTOMOTIVE
$MBMR / 5983 (MBM RESOURCES BHD)
Research by Kenanga
Neutral

“Back in Full Force in May 2024”

New vehicle sales in Malaysia, also known as total industry volume (TIV), soared 18% MoM to 68,665 units in May 2024 as deliveries rose in lockstep with higher production in the absence of major festive holidays. With 5MCY24 TIV making up 44% of our full-year projection of 740k units (-8% YoY), we consider the number meeting our expectation. We believe while it will be business as usual for the affordable segment, fuel subsidy rationalisation will likely hurt the demand for mid-market models, giving rise to a two-speed automotive market locally in CY24. In general, the industry’s earnings visibility is still good, backed by a booking backlog of 200k units. Our sector top pick is MBMR (OP; TP: RM6.30) which is a good proxy to the affordable and fuel-efficient Perodua brand. It also offers an attractive dividend yield of about 7%.

Analyst(s):
Wan Mustaqim Bin Wan Ab Aziz
wanmustaqim@kenanga.com.my

$MBMR / 5983 (MBM RESOURCES BHD)

MBM Resources Bhd extended its rebound yesterday as it reclaimed some of the losses made during the recent profit-taking.

AUTOMOTIVE
$MBMR / 5983 (MBM RESOURCES BHD)
Research by Kenanga
Neutral

“Malaysia Autoshow 2024: EV the Way Forward”

We attended the Malaysia Autoshow 2024 during which leading global automotive companies unveiled their latest innovation, particularly, next-generation electric vehicles (EV), in sync with the aspiration of the National Automotive Policy (NAP 2020). We believe the demand for EV will be buoyed by droves of new EV models and the recent reduction in the road tax for EV. We raise our CY24 total industry volume (TIV) projection by 4% to 740k units (from 710k). We are also taking a more bullish view on Perodua’s D66b and EV model slated for launching next year. We believe while it will be business as usual for the affordable segment, fuel subsidy rationalisation will likely hurt the demand for mid-market models, giving rise to a two-speed automotive market locally in CY24. Our sector top pick is MBMR (OP; TP: RM6.30), which is a good proxy to the affordable and fuel-efficient Perodua brand. It also offers an attractive dividend yield of about 7%.

Analyst(s):
Wan Mustaqim Bin Wan Ab Aziz
wanmustaqim@kenanga.com.my

$MBMR / 5983 (MBM RESOURCES BHD)
Research by Kenanga
Outperform - TP RM5.80

"Riding on Perodua Powerhouse"

MBMR is optimistic of another record year for Perodua vehicle sales, topping 330k units sold last year. Rising acceptance by local
buyers of China-brand vehicles augurs well for its dealership of Jaecoo brand vehicles. We maintain our forecasts, TP of RM5.80 and OUTPERFORM call. The stock offers attractive dividend yield of about 8%.

Analyst:
Wan Mustaqim Bin Wan Ab Aziz
wanmustaqim@kenanga.com.my

General Meetings: Outcome of Meeting