MBM: Strong Earnings Performance Driven by Robust Demand and Cost Controls
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM6.00 (+20%) |
| Last Traded | RM4.99 |
| Recommendation |
Latest financial results reveal a robust performance, with full-year 2025 earnings meeting internal projections and surpassing the Street’s consensus by 6%. The fourth quarter of 2025 (4Q25) saw a core net profit of MYR100 million, marking a 12% increase quarter-on-quarter and a 2% rise year-on-year. This pushed the full-year core PATAMI to MYR333 million, broadly flat compared to the previous year.
Performance Highlights
Revenue experienced a significant uplift in 4Q25, jumping 16% quarter-on-quarter and 12% year-on-year, contributing to a 3% year-on-year revenue growth for FY25. This strong performance was primarily underpinned by record-high Perodua sales during 4Q25.
Segmental analysis indicates that the motor segment’s revenue expanded by 2% year-on-year in FY25, driven by heightened demand. This led to a 2% year-on-year growth in EBIT, with EBIT margins remaining stable at 2.3%. In contrast, the auto parts segment, despite a 9% year-on-year revenue improvement, experienced a 14% year-on-year decline in EBIT due to margin compression, with its EBIT margin falling to 6.5% from 8.2% in FY24.
Outlook and Key Drivers
The outlook remains positive, largely due to Perodua’s promising prospects, fueled by sustained demand and the successful launch of its new Traz model. The Traz has already secured over 5,000 bookings within two weeks of its launch and recorded 1,900 registrations by January 2026, nearly double that of the Ativa model’s initial uptake. This performance is anticipated to translate into an annualized volume of approximately 23,000 units, representing 6-7% of Perodua’s FY26F volume.
Furthermore, a stronger Malaysian Ringgit (MYR) is expected to significantly benefit Perodua. A sensitivity analysis suggests that a 1% MYR appreciation could lead to a 1-2% increase in Perodua’s bottom line, which would subsequently enhance contributions to the company via its associates. The company’s valuation remains attractive, trading below its 3-year average, and offering a compelling FY26F dividend yield of 10%, though potential competition from Proton models is noted as a possible offset.
Recommendation
The investment bank maintains a BUY recommendation, citing the strong demand for Perodua vehicles, tailwinds from a stronger MYR, and attractive valuation. The target price has been raised to RM6.00, suggesting a potential upside of 20%.
