KUALA LUMPUR (May 24): Automotive parts maker MBM Resources Bhd (MBMR), a takeover target of UMW Holdings Bhd, expects 2018 to be a better year after it reported strong first-quarter 2018 results.

Its chairman Datuk Abdul Rahim Abdul Halim said the group sees sales volume and components purchase from its brand partners picking up this year.

New and face-lift vehicle models to be introduced within the group's marques such as Perusahaan Otomobil Kedua Sdn Bhd (Perodua), Volkswagen and Volvo will also help to support volumes in the coming quarters, he added.

"Based on our financial performance in the first quarter ended March 31, 2018 (1QFY18), we are doing quite okay as we already made the necessary impairments last year and so far there is no impairment to be recognised," he told reporters after the group's annual general meeting today.

"Although it is very hard and too early to say, we are hoping that our [earnings] performance [will] be better for the rest of the months.

"Basically, our Perodua sales are doing much better and other models like Volvo and Volkswagen are also selling reasonably well. So, we hope these models will continue to generate good sales (throughout the year)," he added.

Abdul Rahim said MBMR also hopes that its major customer Proton Holdings Bhd will return to its glory days with a new foreign partner in China's Zhejiang Geely Holding Co Ltd. MBMR supplies airbags, safety belts and wheels to Proton, which used to contribute up to 50% to MBMR's revenue.

"We want Proton to get back to its 'old' strength. As a supplier of (car) components, we want Proton to do well so that we can supply more components to them. When Proton's volume drops, ours drop quite significantly (too)," he quipped.

Proton's overall sales for 2017 slipped 1.8% to 70,991 units from 72,291 units in 2016, which it had blamed on lower taxi orders.

On the government's move to reduce the 6% goods and services tax to 0%, Abdul Rahim said the group is expecting to see encouraging car sales during this period.

MBMR's net profit jumped 68.9% to RM32.82 million in 1QFY18, from RM19.43 million a year ago, on improved sales from both motor trading and automotive parts manufacturing divisions, as well as higher profits from associates and joint venture entity.

Quarterly revenue also grew 10.9% year-on-year to RM463.46 million in 1QFY18.

Meanwhile, MBMR president and chief executive officer Nor Hadi Daud said the group's loss-making wholly-owned unit Oriental Metal Industries (M) Sdn Bhd (OMI) is likely to turn around by the fourth quarter of this year as production at its alloy wheel plant — OMI Alloy (M) Sdn Bhd — is ramped up.

OMI Alloy is involved in the manufacturing of alloy wheels, while OMI manufactures steel wheels for motor vehicles and related activities.

The group plans to increase OMI Alloy's production capacity to 45,000 units by year end due to the new trends in alloy wheels, from an average of 35,000 units currently. The plant is able to produce about 60,000 units per year.

On UMW's proposal to take over MBMR from its parent company Med-Bumikar Mara Sdn Bhd, Abdul Rahim, who is also Med-Bumikar's executive chairman, said MBMR is not in a position to comment on the deal as it is at the parent company's level.

Med-Bumikar shareholders comprise Majlis Amanah Rakyat with a 29% stake, and six families each roughly holding about 11% to 13% stake.

UMW is offering RM2.56 per share to Med-Bumikar for the latter's 50.07% stake in MBMR. If Med-Bumikar accepts, UMW intends to undertake a mandatory general offer and take MBMR private. The offer to buy a 50.07% stake in MBMR is valid until Oct 31.

MBMR owns a 22.58% stake in Perodua.

MBMR shares closed up 11 sen or 4.68% to RM2.46 today, for a market capitalisation of RM957.68 million.