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PP 7767/09/2010(025354)

15 March 2010
RHB Research
Malaysia Corporate Highlights Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

New s Upda te
15 March 2010
MARKET DATELINE

MBM Resources Share Price


Fair Value
:
:
RM2.59
RM3.93
Entered Into Distributorship/Dealership Agreements Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (MBMR; Code: 5983) Bloomberg: MBM MK


Net Net
FYE Turnover profit EPS Growth PER C.EPS* P/NTA P/CF Gearing ROE GDY
Dec (RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (x) (%) (%)
2009 1,187.2 68.3 28.2 (41.7) 9.2 0.7 14.7 Net Cash 7.7 3.5
2010f 1,292.3 105.8 43.7 54.8 5.7 39.0 0.7 13.6 Net Cash 10.9 4.7
2011f 1,401.7 116.7 48.2 10.4 5.4 41.0 0.6 12.1 Net Cash 11.0 4.7
2012f 1,607.7 120.0 49.2 2.8 5.2 49.0 0.6 10.1 Net Cash 10.4 4.6
Main Market Listing / Non-Trustee Stock / Syariah-Approved Stock By The SC * Consensus Based On IBES Estimates

Issued Capital (m shares)


♦ Distribution Agreements with Autovox and Heico. MBM’s subsidiary,
Market Cap(RMm)
242.0
626.8
FAST has entered into two separate agreements with Autovox for the sole Daily Trading Vol (m shs) 0.02
and exclusive sale rights to distribute ABT Sportsline and Heico Sportiv 52wk Price Range (RM) 1.95-2.72
products in Malaysia last Friday. Both agreements stipulate that FAST will Major Shareholders: (%)
also be responsible for the import, logistics and coordination of installation Med-Bumikar MARA 58.3
of ABT Sportsline products and Heico Sportiv. EPF 8.6
Valucap 4.4

♦ Autovox Pte Ltd. Autovox Pte Ltd is the regional partner for both ABT FYE Dec FY10 FY11 FY12
Sportsline and Heico Sportiv. Both companies are auto tuning companies EPS chg (%) - - -
based in Germany which deal with Volkswagen Group brands and Volvo cars Var to Cons (%) 12.1 17.6 0.4
respectively.
PE Band Chart

♦ New Appointment for HMMSB. MBM’s other subsidiary DMSB was PER = 9x
appointed as dealer for HMMSB, the distributor of HINO commercial vehicles PER = 7x
PER = 5x
in Malaysia and an associate of MBM. A further announcement will be made
for other trading terms and conditions which will be included into a formal
Dealership Agreement upon execution.

♦ Our take. It has indeed been a good start to the year for MBM as they were
able to secure two distributorship agreements and a dealer appointment. Relative Performance To FBM KLCI
The agreement made between MBM and Autovox will likely open door for
MBM to get into talks with the Volkswagen Group for a future business FBM KLCI
relationship. The agreement with Heico Sportiv on the other hand has
helped to expand MBM’s business scope for Volvo.
MBM Resources

♦ Key Risks. The key risks for these ventures are: 1) Higher-than-expected
cost of distribution 2) Weakening of the RM against Euro.

♦ Maintain forecasts. We are not changing our forecasts for now as it is still
in the early stage of the agreements.
Coverage Under CMDF-Bursa
Research Scheme
♦ Investment Case. We believe this is a good start to the year for MBM as
they continue to strengthen and expand their relationship with ABT
Sportsline, Heico Sportive and Hino. Given this positive development for Wong Chin Wai
(603) 9280 2158
MBM, we reiterate our Outperform call on MBM with an indicative fair value
wong.chin.wai@rhb.com.my
of RM3.93.

Please read important disclosures at the end of this report.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 1 of 2
available for download from www.rhbinvest.com
15 March 2010

Table 2. Earnings Forecasts Table 3. Forecast Assumptions


FYE Dec (RMm) FY09 FY10F FY11F FY12F FYE Dec FY10F FY11F FY12F

Turnover 1,187.2 1,292.3 1,401.7 1,607.7 Perodua TIV (k units) 165.0 173.3 202.5
Turnover growth (%) (1.3) 8.9 8.5 14.7 Daihatsu TIV (k units) 4.4 4.8 4.8
Hino TIV (k units) 3.1 3.2 3.2
Cost of Sales (1,076.0) (1,118.9) (1,204.9) (1,384.4) Volvo TIV (k units) 1.0 1.1 1.1
Gross Profit 111.2 173.4 196.8 223.3 Forex (RM:100JPY)* 3.63 3.59 3.59
* average rate
Depreciation (12.5) (16.3) (13.9) (15.0)
Net Interest 21.5 23.0 24.1 28.3
Associates 54.1 91.0 96.5 98.8

Pretax Profit 92.2 143.1 160.0 164.7


Tax (13.1) (22.6) (25.3) (26.0)
PAT 79.1 120.5 134.7 138.7
Minorities (10.8) (14.7) (18.0) (18.7)
Net Profit 68.3 105.8 116.7 120.0
Source: Company data, RHBRI estimates

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad
(previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The opinions
and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or be contrary
to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be construed as an
offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any manner whatsoever
and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons may from time to time
have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of
persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy
will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts any liability for
any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB Group
may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity securities or loans
of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other services
from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based upon
various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more over
a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended securities,
subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the
actions of third parties in this respect.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the
actions of third parties in this respect.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 2 of 2
available for download from www.rhbinvest.com

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