1H14 earnings in line with our forecast but below consensus.
Expect earnings recovery in FY15 as new start-ups (alloy wheels, Hino and Perodua plant) contribute meaningfully.
Our forecasts are unchanged pending briefing today. Maintain BUY and MYR3.60 TP (9x FY15 PER).
QoQ improvement was due to: (i) 16% jump in associates’ contributions on stronger vehicle sales; and (ii) stronger EBIT at its auto parts manufacturing (+50% QoQ to MYR17m) as operating margins expanded 2.7ppts on higher revenue (+21% QoQ). MBM also declared a 4sen single-tier first interim dividend.
Together with better contribution from its alloy-wheels and Hino plant, MBM is set to deliver a better set of results in 2015.
MBM, as a well-known auto-parts (i.e seatbelts, airbags, wheels) manufacturer, could stand to benefit from increasing CKD activities in Malaysia since the revision of the National Automotive Policy early this year. Since then, MYR2b has gone into Malaysia’s automotive industry and the Malaysia Automotive Institute (MAI) expects another MYR5b-7b from the issuance of two new licenses to produce energy efficient vehicles (EEVs).
Source: Maybank Research - 20 Aug 2014
Expect earnings recovery in FY15 as new start-ups (alloy wheels, Hino and Perodua plant) contribute meaningfully.
Our forecasts are unchanged pending briefing today. Maintain BUY and MYR3.60 TP (9x FY15 PER).
What’s New
2Q14 net profit of MYR32m (+33% QoQ, -16% YoY) took 1H14 net profit to MYR55m (-22% YoY), meeting 51% of our but just 43% of consensus full-year forecasts.QoQ improvement was due to: (i) 16% jump in associates’ contributions on stronger vehicle sales; and (ii) stronger EBIT at its auto parts manufacturing (+50% QoQ to MYR17m) as operating margins expanded 2.7ppts on higher revenue (+21% QoQ). MBM also declared a 4sen single-tier first interim dividend.
What’s Our View
In light of the rising cost of living and GST implementation, we like MBM for its exposure in the small car segment via 22.6%-owned Perodua. Also, we see upside potential to Perodua sales domestically and regionally from the pending launch of A-segment Perodua Axia and increased production capacity by end-2014.Together with better contribution from its alloy-wheels and Hino plant, MBM is set to deliver a better set of results in 2015.
MBM, as a well-known auto-parts (i.e seatbelts, airbags, wheels) manufacturer, could stand to benefit from increasing CKD activities in Malaysia since the revision of the National Automotive Policy early this year. Since then, MYR2b has gone into Malaysia’s automotive industry and the Malaysia Automotive Institute (MAI) expects another MYR5b-7b from the issuance of two new licenses to produce energy efficient vehicles (EEVs).
Source: Maybank Research - 20 Aug 2014
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