|RHB Research maintains Outperform on MBM Resources, ups fair value to RRM6.40|
|Business & Markets 2012|
|Written by theedgemalaysia.com|
|Monday, 07 May 2012 08:57|
KUALA LUMPUR(May 7): RHB Research has maintained its Outperform rating on MBM Resources Bhd and raised its fair value to RM6.40 (from RM5.05) after MBMR fixed the issue price of its 3 for 10 rights issue at RM1.42 and the exercise of the accompanying free warrants at RM3.20.
RHB Reseacrch in a note Monday said the total proceeds of RM340.3m will fund a RM250m capex programme (excluding Hirotako) over the next five years.
“We believe management is currently working hard on potential vehicle assembly opportunities with positive news flow likely in the coming months. There could be potential opportunities with various China commercial vehicle manufacturers.
“Within the MBM Group, potential assembly opportunities exist for Hino trucks. MBM owns a 42% stake in Hino Malaysia.
RHB Research said that among the Japanese marques there could be potential opportunities with Mazda and Mitsubishi who do not yet have major local assembly operations.
It sai Hirotako would drive MBM’s earnings in 2012, adding that demand for airbags would be rising going forward, driven by the Government’s push for all new cars sold locally to be fitted with dual airbags, in addition to rising consumer awareness of vehicle safety issues.
“We lift our 2012-14 earnings estimates by 7.1%, 3.6% and 3.6% respectively after revisiting our Hirotako assumptions and factoring in OMI’s new alloy wheel business.
“We reiterate our Outperform call and lift our fair value estimate to RM6.40 (from RM5.05) after ascribing a 10x PER (close to sector average) to 2012 earnings (from 8.5x),” it said.