PETALING JAYA: MIDF Research said MBM Resources Bhd remains a cheap proxy to Perodua’s volume expansion and the spillover on its parts manufacturing, and Perodua dealership units.
This is premised on seven times FY20 earnings coupled with an attractive 6.7% yield.
MIDF Research is maintaining a “buy” call on MBM with an unchanged target price of RM4.55. The key catalysts for MBM are the launch of Perodua’s new B-segment SUV in FY20, a recovery in industry production driven by the new national car launches and the sale of OMI Alloy assets.
However, the risks to its call are weaker-than-expected demand and a weak ringgit.
The research house said Perodua’s newly launched facelift Bezza, which is packed up on features, is expected to help the carmaker to keep up with Proton.
It pointed out that Bezza is the most affordable sedan in Malaysia to be equipped with auto emergency braking (AEB). “This should help Perodua keep up Proton which has been doing the same in the past year for its A/B segment models,” it said in a report.
MIDF Research highlighted that the Bezza is Perodua’s key volume drivers generating an estimated 4,000 units sales per month and accounting for an estimated 20% of the carmaker’s total industry volume (TIV).
“Perodua management’s target sales of 4,000 units/month for the facelift Bezza is in line with historical sales.”
Perodua is also scheduled to introduce its B-segment SUV, possibly in 2H’20, positioned below the Aruz which is priced at RM70,000-RM80,000.
The Alza is also long overdue for a replacement, first launched in 2009 with its last facelift in 2018.
MIDF Research stated that its forecast of 1.6% year-on-year growth in Perodua’s 2020 TIV at this juncture is conservative.
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