Maintain HOLD on MBM Resources (MBMR) with an unchanged fair value (FV) of RM5.47/share which is derived by pegging to FY25F PE of 8x – 1SD above its 3-year mean. Our neutral 3-star rating remains unchanged.
A combined DPS of 16sen (6 sen interim and 10 sen special) was announced for 2Q24, bringing cumulative 1H24 DPS to 31sen (-6% YoY).
1H2024 core PATAMI of RM148 mil (+12% YoY) was within our expectation and consensus’. It is a clean set of results with no surprises.
The Motor Trading and Assembly revenue grew by 10.2% YoY in 1H24. This was driven mainly by strong Perodua sales. PBT has grown by 10.7% YoY, roughly equal to revenue growth. Similarly, PBT margin was flattish YoY at 2.4%.
Auto Parts Manufacturing saw a 4% YoY dip in revenue, but thanks to a better high value product mix and absence of lumpy cost incurred last year, PBT surged by 25% YoY. Hence, PBT margin has increased by 210 basis points to 9.1%.
The outlook statement is optimistic citing positive TIV growth seen in 1H2024 and there remains a huge backlog order (+100k) for various Perodua models.
Net cash has been reduced by 18.3% QoQ to RM176mil due to dividend payments in the period. If there are no more special dividends forthcoming, we forecast the net cash position will grow bigger going forward.
MBMR generated FCF of RM83mil in 1H2024, which is a notable improvement against negative FCF of RM10mil for the same period last year. This means the company is in a comfortable position to pay more dividends.
The stock currently trades at 8.3x FY25 PE multiple, which is close to its 3-year historical average of 8x. The dividend yield is 7.7%, inclusive of the special dividends.
MBMR is trading close to its fair value and hence our neutral rating call. We will be back with a follow-up report post the analyst briefing.
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