MBMR reported core LATMI -RM5.2m for 3QFY21, which dragged down 9MFY21 to PATMI RM58.4m. We deem the results within HLIB’ expectation (37.8%) and consensus (38.5%), as we expect a strong earnings rebound in upcoming 4QFY21 (as witnessed in 4QFY20). We expect MBMR to continue leverage on the strong automotive sales in coming months, given the high backlogs and on-going strong demand driven by the extended SST exemption measures until 30 Jun 2022. Maintain BUY on MBMR with unchanged TP: RM4.80 based on 10% discount to SOP of RM5.32. MBMR offers attractive dividend yield of 5.6%-7.8% for FY21-23.

Within expectation. Reported core LATMI of -RM5.2m for 3QFY21, but still core PATMI of RM58.4m for 9MFY21. We deem the result within HLIB’s forecast of RM154.5m (37.8%) and consensus of RM151.6m (38.5%), as we expect strong earnings rebound in coming 4QFY21, as MAA reported strong automotive sales rebound for Oct month and we expect similar trend in Nov-Dec months.

Dividend. None.

QoQ/YoY. Recorded core LATMI of -RM5.2m for 3QFY21 (vs. PATMI RM16.6m in 2QFY21 and PATMI RM65.0m in 3QFY20), mainly due to lower group car sales volume (mainly Perodua) and parts/components as well as aftersales services, affected by the longer period of lockdown measures implemented during the quarter.

YTD. Core PATMI declined to RM58.4m in 9MFY21 (vs. RM87.0m in 9MFY20) due to high base effect and longer inactive operational period during current period as compare to SPLY.

Outlook. Management remained cautiously optimistic on the group’s outlook with the recent relaxation of lockdown measures into 4QFY21. The optimism is backed by strong carried-over order bank and strong demand with the SST exemption extended until 30 Jun 2022. The recent launch of Myvi facelift model has attracted strong new orders. Management expects an average 6k new order deliveries for Myvi facelift model.

Forecast. Unchanged.

Maintain BUY, TP: RM4.80. Maintain BUY on MBMR with unchanged TP of RM4.80 based on 10% discount to SOP: RM5.32. MBMR is currently in a net cash position (50.8 sen/share) with continued earnings and cash flow growth, by leveraging onto the strong demand for Perodua models. MBMR offers attractive dividend yield of 5.6%-7.8% for FY21-23.

Source: Hong Leong Investment Bank Research - 25 Nov 2021