Upcoming launch of Perodua Nexis should stand MBM Resources in good stead, says Apex

PETALING JAYA: Apex Securities says MBM Resources Bhd is well positioned to ride potential upside from the launch of the new B-segment SUV, the Perodua Nexis in early 2024.

As a bigger vehicle than the Ativa, the Nexis is a higher-end model. Reports indicate it could be launched as early as April with possible pricing of RM73,000. It will be pitted against the popular Proton X50 and Honda HR-V.

Likely to be based on the Daihatsu New Global Architecture, it could be powered by a 1.5-litre 4-cylinder petrol engine that is shared with the Perodua Alza and the Toyota Vios.

The government has also targeted 2025 for national brands Proton and Perodua to introduce electric vehicles (EVs).

In line with the increasing customer acceptance of EVs, Perodua is planning to collaborate with a Japan-based partner to locally assemble EV models, thus positioning itself well in the evolving market.

The high-value goods tax ranging from 5%-10% is also set to be introduced effective from May 2024.

MBM Resources' core earnings for the financial year 2024 (FY24) to taper off year-on-year (y-o-y) and recover mildly by 3.8% y-o-y in FY25, in tandem with the anticipated industry-wide slowdown for the automotive sector.

The forecast is based on core assumptions that Perodua sales momentum will be sustained on the back of new model releases and its strong order backlog, the brokerage firm noted.

Apex Securities said the key contributor to MBM’s pre-tax profit in FY23 stemmed from earnings generated by its associates, primarily from Perodua, constituting 67.9% of total pre-tax profit, followed closely by the motor trading segment, from direct dealerships of Perodua, Daihatsu, Volvo, and Volkswagen, as well as after-sales service (13.9%).

Concurrently, earnings contributions from auto-parts manufacturing and its joint venture with Autoliv Hirotaka Sdn Bhd stood at 6.1% and 5.8%, respectively.

The brokerage firm said in a research report yesterday it favours MBM due to its association with Perodua, which holds a dominant position in Malaysia and has substantial financial reserves, with a net cash position exceeding RM180.9mil.

It also anticipated MBM will maintain positive operating cash flow over the next two years, with minimal capital expenditure of RM6mil-RM9mil.

Apex Securities has initiated its coverage of MBM with a “hold” call with a target price of RM4.35.