DESPITE challenges, auto company MBM Resources Bhd expects to register continued improvement in net profit this year, backed by spillover demand from the previous year and new vehicle models to be launched this year.
Managing director Looi Kok Loon said it was inevitable that global economic pressures such as higher material costs had resulted in rising costs for the group but it had undertaken counter measures by gaining better production efficiencies.
“There is evidence from sustained recovery in sales continuing from the middle of last year. New model launches and attractive marketing packages are providing the impetus,†he told Starbiz recently.
MBM Resources is part of the MedBumikar Mara Sdn Bhd (MBM) group of companies, which has operations in manufacturing, leisure and motor trading.
MBM’s motor-related businesses, which are grouped under MBM Resources, are Perusahaan Otomobil Nasional Kedua Sdn Bhd (Perodua), Daihatsu (M) Sdn Bhd; Hino Motors (M) Sdn Bhd and Volvo dealer Federal Auto Holdings Bhd.
MBM Resources enjoys good exposure to Perodua with a stake of about 20% in the latter. Perodua is the market leader in the local passenger car segment with more than 30% market share. Current demand for Myvi, its best selling model, remains firm.
“We believe that our strengths are clearly defined in the respective segments that we operate in,†Looi said, adding that the brands within MBM Resources such as Daihatsu, Volvo, Perodua and Hino were all leaders in their respective market segments.
For the fiscal year ended Dec 31, 2007, the auto firm reported a higher net profit of RM111.4mil or 46.26 sen per share against a net profit of RM92.1mil or 38.92 sen per share a year earlier.
The company’s revenue has hit more than RM1bil for the past two fiscal years with sales at RM1.08bil last year.
With investments to develop sales and service networks as well as manufacturing facilities in the pipeline, the group is set to further enhance its sales, Looi said.
“We are developing our sales and services networks, manufacturing facilities as well as investing to develop Federal Auto’s headquarters this year,†he said.
Daihatsu Malaysia, he said, had invested RM5mil in its new 3S (sales, spare parts and services) centre in Kota Kinabalu and Federal Auto’s new Volvo 3S centre in Glenmarie was being developed at a cost of RM10mil.
In addition, auto part makers Oriental Metal Industries, which the group acquired a couple of years ago, will invest some RM12mil in a new tyre module plant in Serendah this year.
Analysts said MBM Resources continued to be the cheapest locally-listed auto company – trading at only 5 times to 5.5 times prospective earnings.
“Firm earnings trend plus an improving dividend payout ratio should re-rate its shares,†Aseambankers said in a report.
The research outfit has targeted a net profit of RM130.4mil on sales of RM1.23bil for its fiscal year ending Dec 31.
TA Securities, meanwhile, has scaled back its earnings target for the company by 10%, given that FY07 earnings were lower than market expectations.
It has also raised concerns on the “strong comeback†of Proton Holdings Bhd and its impact on Perodua sales.
