MBMR's net profit jumped

MBM Resources Bhd ('MBMR'), which is involved in the sale & distribution of Daihatsu & Hino trucks as well as Perodua & Volvo vehicles, has just reported its results for 1Q2008 (QE31/3/2008). Its net profit increased by 81.8% q-o-q or 128.5% y-o-y to RM42.8 million, while its turnover increased by 14.3% q-o-q or 5.7% y-o-y to RM268 million. The net profit was pushed up slightly by an exceptional gain of RM6.1 million from the sale of its stake in MBM Industries Sdn Bhd. It appears that the recovery in auto sale, which started in the middle of last year, is very much intact.



MBMR (closed at RM2.71 yesterday) is now trading at a PE of 4.8 times (based on EPS of 56 sen for the past 4 quarters) or a P/Book of 0.82 times (based on NTA per share of RM3.30 as at 31/3/2008). At these multiples, MBMR is deemed cheap.

Chartwise, MBMR has been trending lower since October last year. I see good support at RM2.60 & immediate resistance at RM2.75-2.80.


Chart: MBMR's weekly chart as at May 8, 2008 (courtesy of Quickcharts)

Based on good performance & cheap valuation, MBMR is a good stock for medium-term investment. While there is no BUY signal from the technical angle, the stock is relatively safe as strong support can be seen at RM2.60, just 10 sen from the current price level.