MBMR is optimistic that Perodua will end 2023 with another sales record, i.e. 314k units (+11.3%). Easing input costs and supply constraints, and efficiency gains from high production volumes of new models, will boost manufacturing margins. Meanwhile, the current new bookings of 35k-40k per month have already surpassed pre-pandemic levels. We maintain our forecasts, TP of RM4.70 and OUTPERFORM call. The stock also offers an attractive dividend yield of >7%.
We came away from MBMR’s 1QFY23 results briefing last Friday feeling upbeat. The key takeaways are as follows:
Forecasts. Maintained.
We also maintain our TP of RM4.70 based on PER of 8x on FY24F EPS which is at a discount to the auto sector’s average forward PER of 11x given its smaller scale, and business model which is skewed toward auto dealerships compared to other players which are more into auto manufacturing. There is no adjustment to our TP based on ESG given a 3-star rating as appraised by us (see Page 4).
We continue to like MBMR for: (i) its strong earnings visibility backed by an order backlog of Perodua vehicles of 190k units, (ii) it being a good proxy to the mass-market Perodua brand given that it is the largest dealer of Perodua vehicles in Malaysia as well as its 22.58% stake in Perusahaan Otomobil Kedua Sdn Bhd, the producer of Perodua vehicles, and (iii) its Tier-1 OEM auto parts manufacturing certification. The stock also offers an attractive dividend yield of >7%. Maintain OUTPERFORM.
Risks to our call include: (i) consumers cutting back on discretionary spending (particularly big-ticket items like new cars) amidst high inflation, (ii) persistent disruptions (including chip shortages) in the global automotive supply chain, and (iii) persistently high cost for materials in auto parts manufacturing
Source: Kenanga Research - 29 May 2023
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Created by kiasutrader | Dec 03, 2024
Created by kiasutrader | Dec 03, 2024
Created by kiasutrader | Dec 03, 2024