MIDF Research has re-affirmed its buy recommendation on MBM Resources Bhd at an unchanged target price of RM4.55.

MIDF Research analyst Hafriz Hezry said in Jan 9 note that key catalysts include the launch of Perodua’s new B-segment SUV in FY20F,  a recovery in industry production driven by new national car launches and sale of OMI Alloy assets.

Perodua kick-started 2020 with a Bezza facelift, which comes in four variants and priced between RM34,580 and RM49,980.

The facelift Bezza comes with a redesigned front and rear-end with a much bolder look, while the interior remains largely similar but with revised trim designs.

However, a significant change is the incorporation of Perodua’s Advanced Safety Assist 2.0 (ASA) versus ASA 1.0 in the outgoing model, though this is only available for the top Advance (AV) variant.

ASA 2.0 was first introduced for the latest MyVi and later the Aruz. Vehicle Stability Control (VSC) and Antilock Brake System (ABS) come standard across all variants versus for the AV variant only previously.

Other equipment features include keyless entry, front corner sensors, reverse sensors and a reverse camera.

The facelift Bezza is packed with features and is the most affordable sedan in Malaysia to be equipped with auto emergency braking (AEB). This should help Perodua keep up with Proton which has been doing the same in the past year for its A/B segment models.

“The Bezza is one of Perodua’s key volume drivers, generating 4,000 unit sales per month and accounting for an estimated 20% of Perodua’s total industry volume (TIV). Perodua management’s target sales of 4,000 units per month for the facelift Bezza is in line with historical sales,” Hafriz said.

Aside from the facelift Bezza, a new B-segment SUV is in the pipeline, possibly in 2H20, positioned below the Aruz which is priced at RM70,000 to RM80,000.

The Alza is also long overdue for a replacement. It was first launched in 2009 with its last facelift in 2018.

“At just 7x FY20F earnings coupled with an attractive 6.7% yield, MBM remains a cheap proxy to Perodua’s volume expansion and the spillover on its parts manufacturing and Perodua dealership units,” Hafriz said.

MBM shares were last traded at RM4.05, up 12 sen before the midday break on Jan 9.

Share this post