MBMR: Earnings Resilience Drives Target Price Revision Amidst Mixed Segment Performance
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Financial analysts have maintained a “BUY” recommendation for the company, revising its target price upwards to RM0.25 (+25.0%) from a previous target, citing resilient performance, particularly in the affordable automotive segment. The last traded price for the stock was RM0.20.
The company demonstrated robust performance in the latest quarter, outperforming its peers due to sustained demand, primarily driven by its significant exposure to Perodua. Group-wide vehicle sales saw a modest increase of 0.6% year-on-year in the second quarter of FY25. Service throughput also recorded a healthy 3.3% year-on-year growth, largely attributed to Perodua’s record sales in recent years.
Performance Highlights
Despite facing some sector headwinds, the company’s profit before tax (PBT) expanded by 8.4% year-on-year. This growth was primarily fueled by increased contributions from its associates, notably Perodua, which benefited from a weaker Japanese Yen, partially offsetting softer sales volumes. While passenger vehicle sales for Perodua saw a modest 1.5% year-on-year decline, this was within expectations and mitigated by strong sales from Volkswagen (+21.0% year-on-year) and the new contribution from Jaecoo. Commercial vehicle sales were mixed, with Daihatsu showing an 8.7% year-on-year increase, while Hino experienced a 31.7% decline in sales volumes ahead of a new model launch.
Challenges and Margin Pressures
The auto parts manufacturing division encountered softer unit sales, leading to a 0.7 percentage point contraction in its margins. This was attributed to a higher proportion of lower-margin models, periodic cost-down demands from OEM customers, and delays in raw material localization efforts. Several auto parts categories, including steel wheels, tyre assembly, and airbags, recorded year-on-year unit declines in the first half of FY25.
Future Outlook
Looking ahead, the outlook remains positive, with several new model launches anticipated in the fourth quarter of CY25. These include Perodua’s QV-E (a lower B-segment EV), Nexis (B-segment SUV), Jaecoo J5 (B-segment SUV), and Hino’s Euro 5 light commercial vehicle. Analysts have revised FY26F/FY27F earnings estimates upwards by 3% to reflect anticipated higher sales volumes from new models like Jaecoo and Hino, alongside slightly improved margins.
