Friday 29 Mar 2024
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KUALA LUMPUR (Jan 2): MBM Resources Bhd gained 3.45% after Maybank Investment Bank Bhd chose the company as its top pick for the automotive sector, based on the group's presence in the economical car segment and exposure to the softening Japanese yen.

At 2.46pm, MBM’s share price rose 10 sen or 3.4% to RM3.00, with 322,500 shares done.

The counter was among the top gainers on the bourse, and had earlier risen as much as 11 sen or 3.8% to reach a high of RM3.01.

In a note today, Maybank named MBM as its “top buy” for the automotive segment, due to its exposure to the economical car segment via its 22.6% associate Perodua Bhd.

“We like auto players with presence in the economical car segments (in view of higher cost of living) and which are not overcrowded by intense competition (i.e. in the B-segment,” said Maybank.

The research house expects consumers to tighten spending and adopt a wait-and-see approach, bracing themselves for higher cost of living and uncertainties surrounding car prices, following imposition of the goods and services tax in April.

“We favour Perodua for we believe its newly-launched A-segment Axia is a game-changer, timely for potential down-trading by consumers,” it said.

Besides that, Maybank said that MBM’s exposure to the Japanese yen, which has weakened against the ringgit, would have a material, positive impact on the group’s margins.

The research house noted MBM's exposure to the yen via its 22.6% stake in Perodua, with approximately 10% of its components denominated in yen, and also MBM’s 42% holding in Hino Motors Manufacturing (Malaysia) Sdn Bhd, with about 55% of Hino’s components denominated in yen.

“In view of a softer yen and a stronger US dollar against the ringgit, we prefer Japanese importers and avoid US importers,” said the research house.

It forecasts an average exchange rate of RM3.00 per JPY100 in 2015, as Japan is expected to continue its stimulus and quantitative and qualitative easing.

It said every 1% variation in the exchange rate would result in a 2% variation in MBM’s net profit.

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