MBM Resources a cheap proxy to Perodua's volume expansion — MIDF Research

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KUALA LUMPUR (Jan 9): MIDF Amanah Investment Bank Bhd Research has maintained its "Buy" rating for MBM Resources Bhd (MBMR) at RM3.93, with an unchanged target price of RM4.55.

In a note today, MIDF said its rating is supported by MBMR's robust 6.7% yield paired with 7 times FY20 earnings.

The research house said MBMR remains a cheap proxy to Perodua's volume expansion and the spillover on its parts manufacturing and Perodua dealership units.

MIDF research analyst Hafriz Hezry expects the "launch of Perodua's new B-segment SUV in FY20, a recovery in industry production driven by the new national car launches, [and] sale of OMIA assets" to drive MBMR's earnings and share price.

He said the facelift Bezza launched yesterday is one of Perodua's key volume drivers, generating circa 4,000 unit sales per month and accounting for an estimated 20% of Perodua's total industry volume.

Hafriz highlighted weaker-than-expected demand and a weak ringgit as risks to MIDF's call.

At 12.09pm, MBMR shares rose 2.79% or 11 sen to RM4.04, valuing it at RM1.58 billion.