Journey to Wealth
MBM Resources - 2Q12 results within expectations
Period 1H12
Actual vs. Expectations
Within ours and the consensus broadly within. The 1H12 net profit of RM70.5m made up 43% of ours and the consensus' FY12 full year estimate.
Dividends A single tier interim dividend of 3 sen per share was declared for the quarter.
Key Result Highlights
1H12 revenue increased by 46% to RM1.2b while the net profit increased by 18%. This was mainly due to the stabilising sales and supply post-Japan earthquake.
Sequentially, 2Q12 net profit dropped by 28% despite a 13% rise in revenue. This was mainly due to higher cost for its Motor Division ie: appreciation in Yen.
YoY, 2Q12 revenue grew by 61% and net profit soared by 144% due to the recovery in supply from Japan.
Outlook For 2Q12, the TIV has chalked up a very convincing automotive sector recovery indication with an 18% growth in TIV volume (QoQ).
Despite the mixed impact from the recovery in supply and tightening of hire purchase financings, the sector is expected to record positive growth in FY12.
The next re-rating catalyst for MBM will be its new business venture i.e. car production as MBM has the assembly license in hand.
Change to Forecasts
No changes in our FY12E earnings, based on TIV growth of 2.3%.
Rating MARKET PERFORM
We are downgrading MBM from OUTPERFORM to MARKET PERFORM due to limited upside to our Target Price.
Valuation We increase our target price higher to RM4.24 from RM3.91 based on higher average PER multiple to 9.0x FY13E (previously 8.3x).
Risks Slow down in global economy and a further tightening in hire purchase financing.
Source: Kenanga
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