Posted by commonsense > 2018-12-15 12:38 | Report Abuse

Hi thinInvest,

Actually during the tax holiday, Perodua sales did not do that well compared to other auto companies. But its not because there was no demand, but its actually due to the New Myvi production issues. Production has already normalise since early October.

So during the 3Q (July to Sept period), sales of Myvi actually dropped from average of 23k cars in 1Q18 and 2Q18 to only 11k sales in 3Q . That being said MBMR still managed to record a PATAMI of RM38.1mil (mainly from contribution of Perodua share of profit).

For 4Q the reason i am confident that it can show profit growth is due to Perodua's October car sales numbers. They managed to sell 19,528 cars vs 16,491 on Oct 17. It is also higher than the August 18 cars sales number of 17,804 (which is the last month of tax free holiday).

This is where Perodua differs from other auto companies where mostly saw falling sales post tax holiday period.

All this numbers are all public info that you can get from the Malaysian Automotive Association (MAA).

It's hard to find profitable companies that can provide profit growth and still trading at low valuation at the moment. Most of the good ones are already trading at a premium vs their peers. In some cases the whole industry (like gloves industry) are trading at premium.

I actually like MBMR not just because of its financial performance but also due to its business positioning.

1) Its a proxy to a strong brand (Perodua which is the market leader in its industry)
2) Domestic focus market (not effected by the current trade war uncertainty)
3) Limited client concentration risks
4) Entry level market focus. Even the new SUV is expected to only be price at RM70k-80k. In challenging economy most people will still need cars to move around in Malaysia. It just that some might decide to buy a cheaper brand. As mentioned before, please use Mcdonald performance during the 2007-2009 crisis as reference. Sales and profit of the company actually went up during the recession due to most people preference to go to their cheaper fast food chain vs to going to more expensive restaurant.
5) Strong balance sheet. Currently MBMR is in a net cash position. So there would be limited risk of being pressured due to higher interest rate trends.
6) Potential financial growth in 2019 (hard to find a lot of companies being able to deliver this at the moment). Growth to be driven by still high demand of new myvi (as of sept there was still 22k firm order of myvi yet to be deliver) and the new SUV. The new SUV will actually create a new customer segment as previously Perodua customers ranges from those with RM20k to RM65k budget for a new car. Now the SUV will carve out a new customer segment of RM70k to RM80k for Perodua. Hence potentially will increase Perodua car sales numbers even further and boost its revenue and profit.

Just out of curiosity. Given the current market condition, where do you think is the best place to put your money into? Are you still invested in Equity?

Regards and best of luck.

Posted by Darth_ > 2018-12-15 12:41 | Report Abuse

14-Dec-2018 Insider EMPLOYEES PROVIDENT FUND BOARD (a substantial shareholder) disposed 207,400 shares on 11-Dec-2018.
13-Dec-2018 Insider EMPLOYEES PROVIDENT FUND BOARD (a substantial shareholder) disposed 512,800 shares on 10-Dec-2018.
12-Dec-2018 Blog Automobile - Riding a low tide
12-Dec-2018 Insider EMPLOYEES PROVIDENT FUND BOARD (a substantial shareholder) disposed 852,000 shares on 07-Dec-2018.
11-Dec-2018 Insider EMPLOYEES PROVIDENT FUND BOARD (a substantial shareholder) disposed 500,700 shares on 06-Dec-2018.
https://klse.i3investor.com/servlets/forum/800001115.jsp

Posted by Darth_ > 2018-12-15 12:42 | Report Abuse

EPF in trouble or MBM in trouble behind EPF disposals?

Posted by lazycat > 2018-12-15 12:50 | Report Abuse

epf holding 15% , their shares could be bought 20 years ago at 20cents a share

Posted by Jaya > 2018-12-16 01:41 | Report Abuse

And then you might convince me

Posted by Jaya > 2018-12-16 01:48 | Report Abuse

Commonsense
You must be a sale rep for this company, cannot sell cars so they put you in here to promote share price and keep you out of their way
Please change vocation la

Posted by k55s > 2018-12-17 15:11 | Report Abuse

EPF if sell until below 10% left 1.5?

Posted by sasuke88 > 2018-12-17 17:36 | Report Abuse

commonsense
thank you for sharing your view on this stock, keep posting and I'm sure many of us want to learn to objectively read the fundamentals of the companies before investing. TQ

Posted by signalmw > 2018-12-17 17:39 | Report Abuse

此外，美國股市指數期貨在大跌之後，暫時沒有反彈跡象。技術指標顯示馬股目前還未進入超賣區域，因此短期內不太可能顯著反彈。

Posted by lazycat > 2018-12-18 11:14 | Report Abuse

oh epf buy 200k mbmr
EMPLOYEES PROVIDENT FUND BOARD (a substantial shareholder) acquired 200,000 shares on 12-Dec-2018. https://klse.i3investor.com/insider/substantialShareholder/5983/17-Dec-2018/446208_1840705352.jsp

Posted by commonsense > 2018-12-19 06:26 | Report Abuse

A friend asked me about the effect of the falling oil price to MBMR prospect given that today oil Brent is currently trading at around USD56 vs the USD85 back in August.

I don't think there is any direct correlation between MBMR's performance (in particular Perodua) compared to the price of crude oil. Off course there will be some indirect correlation for example we would most probably see a weakening of RM vs Yen. But we will most probably see other commodities such as aluminium and steel fall as well (commodity price normally move in the same direction albeit at different quantum) which is a positive thing for the company. So the net net effect of the movement of the crude price to MBMR or Perodua performance is actually minimal. That being said given the depressing oil price, Opec and Russia would most probably do something to help push back the price to above USD60.

What about the outcome of the trade negotiation between Trump and Xi Jinping?

I don't think MBMR or Perodua performance would effect that much since the 2 companies are actually domestic focus. If the two leaders managed to make a deal next year (they are expected to meet in January), it would be a good sign for the global economy. Commodity price would probably go up, including crude oil. This will strengthen our currency (RM). If they fail to reach to an agreement, commodity price would most probably go down, including crude oil. This will weaken the ringgit.

But just like the issue with crude price movement, the net net effect to MBMR (and Perodua) is actually minimal since the companies are not trade focus. Sales of Perodua cars depends on the Malaysia market only.

My thesis (including most if not all analysts) is that 4Q18 result will be a stellar result due to still high sales of new myvi and Perodua push to reduce the new myvi backlog (22k undeliver myvi at the end of 3Q18). This thesis is backed by Perodua Oct 18 sales numbers an improvement of 18% vs Oct 17. Its even higher than Aug 18 (last month of the tax holiday period) number by 9.6%.

The company will continue to grow in FY19 backed by:

1) still high demand of New Myvi
2) launching of new SUV in Feb 19.
3) launching of new Alza in 2H19.

Please read some of the analyst reports as they might be some details that i had missed out.

https://klse.i3investor.com/servlets/stk/pt/5983.jsp

All have a target price of above RM3 for MBMR with the lowest being Hong Leong at RM3.13 and the higher Maybank at RM4.18.

Here is maybank report which is not in i3.

http://www.bursamarketplace.com/mkt/tools/research/mbm_resources_stellar_results_trounced_all_expecta-589394

Thanks.

Posted by commonsense > 2018-12-21 10:28 | Report Abuse

Guys,

Just want to give some updates on MBMR (but actually on Perodua).

Perodua sales numbers in Nov 2018 was at 21,110 which is a 27% increase compared to Nov 17 sales of 16,636. In addition, the combined sales of Perodua in Oct and Nov of 40,638 cars represent already 80% of the total sales number in 3Q18 (which deliver a PATAMI or RM38.1mil).

It is safe to bet that 4Q18 result would most probably be higher than 3Q18 and 4Q17. I am expecting a PATAMI of at least RM40mil in 4Q (however if sales in Dec is still high at around 20,000 cars, 4Q PATAMI should be a lot higher).

Thanks.

Posted by ks55_ > 2019-01-02 21:50 | Report Abuse

More than 20k people register for RapidKL's unlimited passes

Read more at https://www.thestar.com.my/news/nation/2018/12/31/more-than-20k-people-have-registered-for-rapidkls-unlimited-passes/#O3ZxKsdQpjH7ilPH.99

Posted by ks55_ > 2019-01-02 21:51 | Report Abuse

So many using RapidKL why need to buy new Perodua car? Car sales bound to drop in 2019. Take profit.

Posted by sell > 2019-01-02 21:55 | Report Abuse

More than 20k people register for RapidKL's unlimited passes
Read more at https://www.thestar.com.my/news/nation/2018/12/31/more-than-20k-people-have-registered-for-rapidkls-unlimited-passes/#O3ZxKsdQpjH7ilPH.99

Posted by Icon8888 > 2019-01-03 07:18 | Report Abuse

The bulk of them could be those currently taking public transport

Now they have a chance to travel cheap why not grab it ?

Posted by Icon8888 > 2019-01-03 07:39 | Report Abuse

https://klse.i3investor.com/blogs/icon8888/188587.jsp

Posted by BULL1000BEAR1000 > 2019-01-03 13:00 | Report Abuse

Car price is very expensive. Do you think ppl are stupid?

Posted by Icon8888 > 2019-01-03 16:04 | Report Abuse

https://klse.i3investor.com/blogs/icon8888/188684.jsp

Posted by Icon8888 > 2019-01-03 16:04 | Report Abuse

Part 2

Posted by Choivo Capital > 2019-01-03 17:58 | Report Abuse

commonsense,

Stop trying to fry MBMR up in every single forum, by talking as if its gold selling at the price of lead.

You make me itch to balance the equation by talking it down like mad here.

Posted by Choivo Capital > 2019-01-03 18:00 | Report Abuse

Its at best a 30-35% discount to fair value.

I can name you at least 3 companies selling at 40-50% off fair value. And this is fair value derived from earnings.

If we go to RNAV, i can name you 10 at more than 50% discount easily.

Posted by megatti_maf > 2019-01-03 19:07 | Report Abuse

Good write up icon8888

Posted by Icon8888 > 2019-01-03 20:28 | Report Abuse

Why so angry ? What makes you think that common sense needs your approval to talk about his favourite stock ?


Posted by Choivo Capital > Jan 3, 2019 05:58 PM | Report Abuse

commonsense,

Stop trying to fry MBMR up in every single forum, by talking as if its gold selling at the price of lead.

You make me itch to balance the equation by talking it down like mad here.

========

Posted by Choivo Capital > Jan 3, 2019 06:00 PM | Report Abuse

Its at best a 30-35% discount to fair value.

I can name you at least 3 companies selling at 40-50% off fair value. And this is fair value derived from earnings.

If we go to RNAV, i can name you 10 at more than 50% discount easily.

Posted by VenFx > 2019-01-03 20:50 | Report Abuse

i dont know Mbmr's will shoot to where ?

But, 2.60 surely a fat ang pau already ...

Posted by yongch > 2019-01-03 21:44 | Report Abuse

This counter definitely will fly start tmrw simple logic SUV New launch will Beat proton further more those alloy wheels business started break even no more further lost...Hahaha..tp3.0!!!Congrats those ikan bilis who already bought below 1.90...its time to receive early big CNY AngPow!!!!tp3.0!!!!Ong Ah!Heng Ah!!Huat Ah!!!

Posted by apolloang > 2019-01-03 22:35 | Report Abuse

2.50 got chance,undervalued stock but hentam penny stocks can make more lah.if conservative u can try this stock

Posted by Choivo Capital > 2019-01-04 13:17 | Report Abuse

He does not need my approval, and can keep doing so. I'm just calling him out.

But he is being unethical. By going to every single forum and do weak and biased analysis on that company for the sole purpose of diminishing it in comparison to MBM, which he intends to fry, and sell to the retailers, which consist of retired people with weak investment/speculation decision making abilities, who follow after him

If you see fraud and don't call fraud, you are a fraud. That's just me.

If so great, diam and buy.

Every q result out show on malaysiastockbiz, every q season, people go click, and if see such wonderful results, will naturally buy and push price up.

Although, tbh, its probably better than people do stupid things in market and get burned, thus leaving the market, but i have too much indignation for that for some reason.

=====

Why so angry ? What makes you think that common sense needs your approval to talk about his favourite stock ?

Posted by megatti_maf > 2019-01-04 16:00 | Report Abuse

Wow gained alot today, have I missed the boat?

Posted by commonsense > 2019-01-05 08:34 | Report Abuse

Hi Choivo,

It is expected that some people might not approved of my methods. In general, what I am actually doing is marketing MBMR to the investment community. The issue that I saw with this company is that even after delivering good quarterly results and having a firm financial growth prospects, investors has yet to notice of its appeal (as highlighted by icon8888).

Last month, I decided to try out a marketing strategy for the company. At the current market environment, I believe most investors are finding it difficult to find potential companies to invest in either because of the valuation (most good companies are already trading at a premium vs Bursa average) or the lack of near to mid term growth (due to various issues most pronounce is the trade war between US and China which has affected export nation like Malaysia). From there I had come up with a list of companies where the current investors might be looking to diversify their positions. If you go through the list of companies where I had promoted MBMR, mostly are:

1) companies that has been loss making for more than 2 financial year

2) companies that currently trading at high market valuation (and facing difficulties in delivering earning growth)

3) companies that are facing earnings uncertainties due to change of market environment

I believe by diversifying their position into MBMR they will actually improving their portfolio strength. I will not go and promote MBMR to investors of an already good companies which I define as having good earnings outlook and decent market valuation. For example, I would not be going to RCE Capital, Freight Management, BCB, Yee Lee, Johotin, Dufu, Myeg or Ekovest to promote MBMR as it would not make much sense for the investors to sell their current positions in these companies to invest in MBMR. Most of these companies are already trading at low market valuation and their share price are mainly affected due to the market sentiment. I believe their business fundamentals are still intact and investors need to ride the short term volatility for a while (just like what happened to MBMR prior to the December rebound).

In general, the reason why I believe MBMR should be added into most of the investors’ portfolio are (sorry, this will be quite a repetition for some people):

1) It’s a proxy to a strong brand (Perodua which is the market leader in its industry)

2) Domestic focus market (not effected by the current trade war uncertainty)

3) Limited client concentration risks

4) Entry level market focus. The new SUR Aruz is priced at only RM72k to RM77k. In challenging economy most, people will still need cars to move around in Malaysia. It just that some might decide to buy a cheaper brand. As mentioned before, please use Mcdonald performance during the 2007-2009 crisis as reference. Sales and profit of the company actually went up during the recession due to most people preference to go to their cheaper fast food chain vs to going to more expensive restaurant.

5) Strong balance sheet. Currently MBMR is in a net cash position. So, there would be limited risk of being pressured due to higher interest rate trends.

6) Potential financial growth in 2019 (hard to find a lot of companies being able to deliver this at the moment). Growth to be driven by still high demand of new myvi (as of sept there was still 22k firm order of myvi yet to be deliver) and the new SUV. The new SUV will actually create a new customer segment as previously Perodua customers ranges from those with RM20k to RM65k budget for a new car. Now the SUV will carve out a new customer segment of RM70k to RM80k for Perodua. Hence potentially will increase Perodua car sales numbers even further and boost its revenue and profit. The company in previous financial years was highly affected by the under performance of its alloy wheel and auto component businesses. Every year since 2015, MBMR had to make impairments (mostly in 3Q & 4Q) to reflect the deterioration of these 2 ventures. In FY17, the company had decided to fully impaired these 2 businesses which is why it had recorded a big loss of RM145 mil for FY17 of which RM250mil is actually due to impairment (so basically core pat was still at RM100mil). Management had reassured shareholders that there will be no more impairment plan going forward (they mentioned this during the AGM back in May 18. You can go through the minutes for confirmation).

7) And finally, the undemanding valuation. Currently it is only trading at around 6x PE even though the auto industry average at the moment is around 15x PE.

In the end, the objective of all this is to invite people to discuss on MBMR potential as a company for them to invest in. The decision to buy or sell is still at the hand of the investors.

Regards

Posted by commonsense > 2019-01-05 08:35 | Report Abuse

Feel free to highlight to me any errors that I made in assessing the other companies when I was promoting MBMR. I will take out my comments on the companies’ forum if the assessment made was wrong. However, I need to highlight that most of the assessments are made based on public info (mainly from bursa website).

Have a nice weekend

Posted by Icon8888 > 2019-01-08 08:33 | Report Abuse

Maybank upgrades earning projection for MBM (3 January 2019)

FYE Dec (MYR m) FY18E FY19E FY20E

Core net profit 150 177 176

Core EPS (sen) 38.5 45.2 45.0

Posted by Icon8888 > 2019-01-08 08:37 | Report Abuse

January 3, 2019

MBM Resources (MBM MK)
All pistons go!

Share Price MYR 2.26
12m Price Target MYR 4.50 (+99%)
Previous Price Target MYR 4.18

1. Perodua trifecta

MBM is the best exposure to Perodua, benefitting as a (i) 22.6%
shareholder of Perodua, (ii) dealer for Perodua cars, and (iii) auto parts
supplier. Imputing a sales boost from Perodua’s new Aruz model, we raise
FY19/20 net profit forecasts by 8%/6% respectively. We also raise our TP
to MYR4.50 (+8%), rolling forward valuations to FY20 on unchanged 10x
PER peg. MBM is our second favourite auto stock after UMWH. BUY.

2. A boost on FY19/20 earnings from Perodua Aruz

We now include contribution from the SUV Aruz model (2k/1.5k units
monthly for FY19/20 vs Perodua’s target of 2.5k units monthly) into our
earnings model. Partially offset by expectation for lower sales of the
other models (i.e. Myvi, Bezza and Alza – see Fig. 2 for our revised
assumptions), we raise MBM’s FY19/20 earnings forecasts by 8%/6%
respectively. Eyes will be on the booking and delivery of this model, to
be revealed frequently in the next few months. Consistent
outperformance could present further upside to our earnings forecasts.

3. Strong results will not end in 3Q18

Perodua has already achieved its 2018 sales target of 209k units in 11M18
and is poised to exceed our 220k-unit (+7% YoY) assumption by 3-5%; for
this, we expect MBM to report further sequential earnings growth in
4Q18 from already a solid quarter in 3Q18. This would help MBM close
the year on a new high; beating its 10-year high of MYR142m net profit in
2010. Into 2019, the introduction of the new Perodua Aruz and Toyota
Vios and Yaris models should also offer further opportunities for MBM’s
alloy-wheel plant; recall that the new Toyota Rush, launched in Oct
2018, is a CKD model rolling out of Perodua’s plant. These factors should
help MBM climb a step further in 2019 as well.

4. Underpriced at 5x CY19 PER currently

Despite recent climb in share price (+17% in the last one month), MBM is
still very much undervalued; its 22.6% effective stake in Perodua alone is
worth ~MYR2.2b (based on 13x FY19 PER to our revised Perodua earnings
of MYR737m in FY19), 2.5x of MBM’s current market cap.

Posted by mneo > 2019-01-09 08:11 | Report Abuse

If the new SUV,Aruz, for MBMR is selling better than proton x70.. it will be a good future growth for MBMR...

Posted by yongch > 2019-01-09 20:05 | Report Abuse

No worries..it's 100%better than any of local car maker!!!!72k for familys SUV,where u can find???just this price no others can beat lo!!!!tp3.0!!!!kikiki...another big AngPow before CNY!!!!

Posted by Icon8888 > 2019-01-09 20:19 | Report Abuse

I heard Aruz is actually the Toyota Rush

Posted by VenFx > 2019-01-09 20:20 | Report Abuse

Share Price MYR 2.26 
12m Price Target MYR 4.50 (+99%) 
Previous Price Target MYR 4.18

ME : SIFU GIVE STRAIGHT ANSWERED TIP... I LIKE IT.

Posted by VenFx > 2019-01-09 20:26 | Report Abuse

Ok !
My 1st tip received from icon8888 sifu.

Full blessing in MBMR !
2019 got newToyota Rush,with supplement from MBMR .
Thank you dulu !

Posted by Icon8888 > 2019-01-11 12:02 | Report Abuse

No more seller

Posted by Icon8888 > 2019-01-12 13:16 | Report Abuse

https://www.thestar.com.my/business/business-news/2019/01/12/eyes-on-mbm-as-auto-sector-poised-for-a-rebound-mbm-poised-to-ride-on-recovery-in-auto-sector/

Posted by WongJiaHao > 2019-01-15 09:31 | Report Abuse

oh new perodua is out for test drive? nice

Posted by commonsense > 2019-01-16 06:10 | Report Abuse

Perodua just officially launch the new SUV Aruz yesterday.

The SUV has already 2,200 bookings. Management is targeting to sell around 2000- 2500 units per month (total annual target of 30,000 units) which will increase Perodua sales by more than 10% when compared to FY18 target sales of 209,000 cars (even that was achieved in Nov. New target should be around at least 225,000 units). In general the SUV should deliver a higher profit margin when compared to its other offering. This would benefit MBMR directly given its exposure to Perodua via its 22.6% equity interest.

Given the RM145mil profit target for FY18 (9m18 is already RM106mil), MBMR should be able to reach a profit to shareholder of around RM160mil in FY19 (an improvement of around 10%) backed by:

1) Sales and profit of the new SUV Aruz which as mentioned above will add more than 10% to Perodua annual sales.

2) Turnaround of alloy wheel manufacturing which will see an increased in production from the new Perodua SUV but more importantly the collaboration with China's biggest alloy wheel manufacturer Citic Dicastal. MBMR will help produce alloy wheels for Citic for its European market.

3) Still high demand of the new Myvi as shown by the Oct and Nov 18 sales (hopefully Dec as well).

4) The launch of the all new revamp Alza expected in 2H19.

At the current share price, the company is only being valued at a forward PE of 6.1x which is a lot lower than the industry average of 15x.

Regards

Posted by Icon8888 > 2019-01-17 04:43 | Report Abuse

https://cdn1.i3investor.com/my/files/st88k/5983_MBMR/pt/MIDF/5983_MBMR_MIDF_2019-01-16_BUY_3.80_MBM%20Resources%20-%20Cheapest%20Proxy%20to%20Perodua%20TIV%20Expansion_-303948875.pdf

Posted by megatti_maf > 2019-01-17 17:06 | Report Abuse

Touched 1B market cap today.

Posted by ChanZheKang > 2019-01-17 17:10 | Report Abuse

mbm expected 3.0 by end of this month? better hold on then

Posted by tonychuan1994 > 2019-01-17 18:07 | Report Abuse

Just saw the news today.
Will go in tmr

Posted by Icon8888 > 2019-01-17 18:17 | Report Abuse

Can aim higher

RM4 by year end

Posted by commonsense > 2019-01-19 01:12 | Report Abuse

Guys,

Some updates on MBMR.

It seems that management had decided to sell off the loss-making alloy wheel business instead of trying to turn it around via collaboration with Citic Dicastal which is actually a better decision for MBMR’s shareholders. Reason being:

1) The disposal of the business would improve MBMR’s future profit since it is still currently generating losses to the group in FY18 albeit at a lower level compared to previous years. Even with the collaboration with Citic, management was only expecting for the operation to either breakeven or post small profit.

2) Any sales of the business would most probably result in a gain on disposal for the company given that most of the investment has already been impaired in the company’s balance sheet.

3) The disposal will free up more cash in the future that could potentially be used to reward shareholders by paying higher dividends.

Total Perodua car sales in 4Q18 was at 59,040 units which is a growth of 10.8% vs 4Q17 and 15.5% vs 3Q18. This brings the total Perodua car sales in FY18 to 227,243 units which beats management official target (of 209k cars) by 8.7%. With this result, the company should be able to deliver a core profit to shareholders of around RM145mil to RM150mil for 2018.

As mentioned previously, growth in FY19 would be driven by the still high sales of new Myvi, the 30k units target sales of the new SUV Aruz and the introduction of the newly revamp Alza in 2H19. With these, MBMR is expected to deliver a profit to shareholder of around RM160mil to RM165mil in FY19.

Regards and have a nice long weekend.

Posted by megatti_maf > 2019-01-22 09:07 | Report Abuse

Morning. Read the article on the edge over the weekend on the disposal of aloy wheel plant. Wonder how much if the profit jump after the disposal?

Posted by commonsense > 2019-01-22 10:06 | Report Abuse

Hi Megatti,

If you look at segmental reporting of 3Q18 result you would see that the total PBT of the auto parts manufacturing segment amounted to RM3.3mil. Excluding the result from associates (Hino Motors Manufacturing) and JV (Autolive Hirotako), the remaining auto component business actually recorded a loss of around RM9.1mil. This represent a combined contribution from both Hirotako Holdings and Oriental Metal Industries (of which the alloy wheel business is park under).

From my understanding, Hirotako has always been able to deliver profit to MBMR which means that the minimum losses from OMI should be around RM9.1mil of which mainly comes from the alloy wheel business (Here I am assuming Hirotako contribute a minimum of RM0 to the company’s PBT). Based on this, we can assume that OMI losses to MBMR should be at least around RM10 mil for the full year of FY18.

If management decides to sell the alloy wheel business, investors can expect the profit of MBMR to increase by at least RM10mil once the disposal takes place. Using the target profit of RM145mil in FY18 before disposal, MBMR profit for FY18 could be higher at around RM155mil. If management managed to disposes of the business in FY19, I expect the full year profit for the year to increase from the original projected profit of RM160mil to RM170mil. This would mean at the current price, MBMR is actually only trading a PE valuation of less than 6x vs the industry average of 15x PE.

Regards.