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Thursday, May 19, 2016

MBMR: Earnings improved sequentially

Results Update

For QE31/3/2016, MBMR's net profit rose 148% q-o-q but dropped 48% y-o-y to RM18 million while revenue dropped 15% q-o-q or 37% y-o-y to RM374 million. Revenue declined y-o-y, mainly due to 17%-drop in revenues in motor trading & one-off property contribution in the corresponding quarter last year. Profit before tax declined by 66%, as a result of l12%-decline in contributions from motor trading and a loss from the auto parts manufacturing of RM2.3 million (as compared to a profit of RM2.2 million last year).


Table 1: MBMR's last 8 quarterly results


Chart 1: MBMR's 40 quarterly results

Valuation

MBMR (closed at RM2.20 yesterday) is now trading at a PER of 14 times (based on last 4 quarters' EPS of 16 sen). While its PER is high, MBMR's PBR is low at 0.55 times. This makes the stock fairly attractive for investors with a long-term investment horizon.

Technical Outlook

MBMR has been in a downtrend after it peaked in 2013 at RM4.20. The decline may be arrested by its long-term uptrend line support at RM2.00-2.10.


Chart 2: MBMR's monthly chart as at May 18, 2016 (Source: ShareInvestor.com)

Conclusion

Despite the poorer financial performance, I would rate MBMR as a  HOLD due to its strong position in the local automotive sector, good management. and strong asset-backing per share

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, MBMR

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