KUALA LUMPUR (March 4): Affin Hwang Capital Research has downgraded MBM Resources Bhd (MBM) to “Hold” at RM3.46 and cut its target price to RM3.60 (from RM5.40) and said it was cautiously optimistic on the prospects of MBM after attending the recent 4Q19 analyst briefing.

In a note today, the research house said in the immediate term, the sales volume of MBM's 22.6%-owned Perodua may moderate from the recent high of 240,00 units in 2019, considering the challenging economic outlook amid the Covid-19 outbreak and intense rivalry with Proton.

It said a prolonged Covid-19 epidemic could also cause temporary manufacturing supply disruption for the auto-parts division, while also dampening demand.

“As such, we lower our 2020-22E EPS by 4-5%, lower our 12-month TP to RM3.60 (from RM5.40) and downgrade MBM to a Hold.

“At a 7x 2020E PER, the valuation looks fair,” it said.