Shares of MBM broke another new record high in November, after the company declared a special dividend following better-than-expected results. Core net profit for the cumulative nine months ended Sept 30, 2024 (9MFY2024) accounted for 81% of the consensus full-year estimate.

However, analysts were still cautious over further upside to the stock following the recent rally. They remain cautious due to several macroeconomic challenges including a potential increase in the goods value tax that may raise the cost of vehicles.

There is also the impending targeted subsidy rationalisation and rising living costs, which could drag on purchasing power and sentiment.

Shares of MBM have rallied mainly boosted by record car sales in the industry. New vehicle sales could potentially break last year’s record high and hit 800,000 units this year driven by robust demand for national cars. It manufactures seat belts, airbags, and steering wheels, serving mainly Perodua, the country’s biggest carmaker by volume.

MBM also has an associate assembling Hino-branded vehicles. Most analysts are cautious on MBM given that the strong performance of Perodua has already been priced in following the recent rally.

Competition is also intensifying with numerous new model launches in the pipeline as well as the entry of Chinese brands, particularly in the electric vehicle market.

Net profit for the third quarter ended Sept 30, 2024 (3QFY2024) was down 17% year-on-year to RM87.38 million. However, despite the dip in net profit, MBM declared a special dividend of 22 sen per share. The company registered RM28.4 million gain from the sale of a property, which boosted its 3QFY2023 results.