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Thursday, November 19, 2015

MBM Resources' 3Q net profit plunges 66.8%

KUALA LUMPUR (Nov 18): Auto parts maker MBM Resources Bhd ( Valuation: 2.00, Fundamental: 1.20) saw its net profit fall 66.8% to RM8.62 million or 2.21 sen a share for the third quarter ended Sept 30, 2015 (3QFY15), from RM26.01 million or 6.66 sen a share a year ago, mainly due to lower contributions from its joint venture (JV) with Autoliv Hirotako Sdn Bhd and associates.

Revenue for 3QFY15 dropped 2.8% to RM411.18 million, from RM423.09 million in 3QFY14, due to lower sales of continental makes of higher value, despite better overall volume sales.

In a filing with Bursa Malaysia today, MBM Resources said share of results of JV fell by 39.1% to RM2.7 million in 3QFY15, while share of results of associate companies declined by 54.3% to RM13.2 million.

"The share of the JV's results declined 39.1% due to lower production deliveries to one of its major customers, as well as unfavourable foreign exchange movement," it said.

"Associates' results were lower by 54.3% to RM13.2 million, mainly due to adverse foreign exchange movement, despite higher vehicle sales by Perusahaan Otomobil Kedua Sdn Bhd (Perodua)," it added.

The group's gross debt to equity ratio as at Sept 30 was 21.4%, compared with 25.7% a year ago, while net assets per share rose to RM4.07.

The weak results pulled down its net profit for the nine months period (9MFY15), which dropped 9.5% to RM72.99 million or 18.68 sen a share, from RM80.67 million or 20.65 sen a share in 9MFY14.

Revenue for 9MFY15, however, rose by a marginal 1.1% RM1.38 billion, from RM1.36 billion in 9MFY14.

On prospects, MBM Resources said the current market condition is expected to remain challenging.

"Market competition remains intense, as market players are expected to continue their aggressive sales campaigns to stay competitive and maintain market share.

"The further weakening of the ringgit will affect margins and operating costs for the group, as well as JV and associates," it added.

MBM Resources said it is leveraging on sales campaigns by the brand principals to push for vehicle sales and improve aftersales revenue.

It is also preparing for higher production of alloy wheels to meet newly-secured orders from customers, and will continue to focus on its cost and working capital management.

MBM Resources' shares closed 3 sen or 1.07% higher at RM2.83 today, bringing its market capitalisation to RM1.09 billion.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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