AmResearch downgrades MBM to hold. (NST Business) KUALA LUMPUR: AmResearch downgrades MBM Resources Bhd to hold on until earnings from core businesses come through meaningfully. We lower our fair value to RM3 per share following a recent company visit. We trim our projections by 23 per cent/16 per cent for financial year (FY) 2014/FY 2015 to factor in higher losses at OMI and lower margins for MBM’s auto distribution division. We now expect MBM’s FY 2014 forward earnings to contract by 15 per cent on-year, before staging a recovery in FY 2015. --------- Bengkel Saham Fundamental Profit.at.Bursa, Here => bit.ly/pabworkshop2014 --------- OMI’s alloy wheel supply to Perodua has been delayed due to additional requirements in its manufacturing process. OMI is likely to miss the initial supply phase for the Perodua Axia, which means that the volume ramp-up that we had initially expected will be delayed into FY 2015, at best. An incremental RM500,000 had to be invested, raising capex for OMI’s alloy wheel plant marginally to RM103 million. Losses from OMI’s alloy wheel plant are expected to double this year to RM20 million from a RM10 million pre-tax loss in FY 2013 given that incremental fixed cost had kicked in while volumes remain well below breakeven due to delays in supply ramp up as mentioned above. The plant is now undergoing audits for several other non-national clients, which further increases fixed cost in the near term. On auto distribution, we see developing risk for either margin or volume expectations in the A-segment given the tightening monetary policy and a potential inflationary impact once GST kicks in, in early FY 2015. A-segment buyers are typically the most sensitive to changes in disposable income and credit access/cost. Perodua had already slashed its 2014 sales target to 193,000 from an earlier 197,000. Stricter lending guidelines in January 2012 saw Viva sales drop by 19 per cent on-year in first quarter 2012, if this is of any indication,said AmResearch in its report today. AmResearch said management clarified that discounting (RM3,000-RM5,000 per car) for the Viva will be compensated by weaker Japanese Yen. However, consensus expectations will be negatively impacted as the weaker Yen would have been largely factored into projections prior to the discounts, which is effectively a 9-15 per cent reduction against the model’s original price. Meanwhile, Perodua’s new plant will incur initial losses of circa RM2 million (MBM’s share), which will marginally drag core contribution from Perodua. AmResearch noted that MBM is trading at 9.5 times FY 2014 earnings, more or less at par to historical average. While we do not see much downside to share price, the stock lacks meaningful catalysts in the near term. We think valuations are unlikely to re-rate.” --------- Bengkel Saham Fundamental Profit.at.Bursa, Here => bit.ly/pabworkshop2014 --------- | #saham | #mbmr |
Posted on: Tue, 19 Aug 2014 11:55:00 +0000
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