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Thursday, May 24, 2018

MBMR: Earnings "rebounded"

Results Update

For QE31/3/2018, MBMR reported a PBT of RM39.2 million as compared to a pre-tax loss of RM202.6 million while revenue rose 4.4% to RM463 million. MBMR's losses incurred in the preceding quarter was mainly due to 3 major impairment losses, which are goodwill written off of RM145.637 million; investment in JV of RM31.030 million and for PPE of RM65.891 million. If these items were excluded, PBT would jump to RM39.9 million.


Table: MBMR's last 8 quarterly results


Graph: MBMR's 48 quarterly results

Valuation

MBMR (closed at RM2.35 yesterday) is now trading at a PER of 11 times (based on adjusted EPS of 22 sen*). In addition, its Price to Book ratio is at 0.6 time only. At these ratios, MBMR is deemed fairly attractive in view of the expected recovery in this sector. In any event, MBMR is trading below the offer price of RM2.56 made by UMW to takeover the company.

(/Note: Adjustment by excluding the 3 major impairment losses explained above.)

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. If it can break above its downtrend line, RR at RM2.60-2.65, its next upleg may begin.


Chart 1: MBMR's monthly chart as at May 22, 2018 (Source: ShareInvestor.com)


Chart 2: MBMR's weekly chart as at May 22, 2018 (Source: ShareInvestor.com)

Conclusion

Based on improved financial performance, I would rate MBMR as a BUY 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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