KUALA LUMPUR: MBM Resources Bhd's sales should continue to be supported by the backlog of orders, recent new model launches and replacement cycle, according to RHB Investment Bank Bhd.
Its analyst Eddy Do Wey Qing, however, said the ongoing nationwide third edition of Movement Control Order (MCO 3.0) might affect MBM Resources'near-term footfalls into showrooms in particular its 20 per cent-owned Perusahaan Otomobil Kedua Sdn Bhd (Perodua).
Perodua's sales in April were adversely impacted by shortages of semiconductor chips, recording 20,399 units or 16.5 per cent lower from 24,431 units registered in March.
"We remain cautiously optimistic on MBM Resources. We keep a 'buy' call for MBM Resources with a new target price of RM3.80 from RM4.30 per share," Do said in a report today.
He said the chip shortages were concentrated on the Myvi rather than other models in Perodua's stable.
"A rationing in vehicle production is being exercised, which limits a knee-jerk-type sales volume drops in the coming months," he added.
For the first four months of 2021, Perodua delivered a total of 78,304 vehicles, 73.9 per cent higher than the 45,034 units registered in the corresponding period of 2020.
"We expect consumers to bring on their purchases, leading to a stronger first-half of 2021. Excluding this, we maintain our sales volume at this time, as we believe buying interest should continue to sustain throughout this year."
Perodua had maintained its sales and production target of 240,000 units and 272,000 units for 2021 respectively.
Perodua's sport utility vehicle (SUV), the Ativa registered 4,624 units in April, representing 22 per cent of the manufacturer's total vehicles during the month.
"The Ativa is still the SUV king as it continues to outsell the Proton X50, which recorded 3,583 units in April. We estimate 9,000 Ativas have been delivered since its launch in March, with bookings averaging at 290 units per day."
RHB Research has lowered MBM Resources's financial years 2021-2023 earnings by 2.0 per cent to 3.0 per cent after accounting for a stronger US dollar/ringgit of RM4.15 for FY21 and RM4.25 for FY22 and beyond from RM4.12 previously.
"The impact is generally not significant and can be recovered through foreign exchange price negotiations with customers.
"We make no other changes to our key assumptions. We roll forward our valuation base year to FY22 and, subsequently, lower our target price earnings to ratio to eight times, as we think near-term catalysts are priced in following the launch of the Ativa."
Weaker-than-expected consumer sentiment, rising number of Covid-19 cases, and unfavourable foreign exchange trends should pose downside risks to earnings, it added.