KUALA LUMPUR: MBM Resources Bhd's core net profit in the second quarter ended June 30 2023 (2Q23) is weaker by 35 per cent quarter-on-quarter (q-o-q).
Affin Hwang Capital said MBM had clocked in a weaker core net profit of RM52.2 million, down 34.7 per cent q-o-q
from a high base from vigorous delivery of backlog orders during the prior quarter.
"Its 2Q23 core net profit margin was lower by 4.7ppts (percentage points) q-o-q on weaker share of profits from its associate, Perodua, possibly due to higher discounting activities to boost
higher sales," the firm said today.
Affin Hwang downgraded MBM to "Sell" from "Hold" with a revised target price of RM3.22.
This is due to the firm's cautious view on Perodua's earnings outlook and competitive automotive landscape amid the sprouting up of new electric vehicle entrants.
Still, Affin Hwang raised Perodua's total sales forecast to 260,00p units from 220,000 units on stronger-than-expected sales volume and healthy backlog orders of 155,000 units.
The firm, however, slashed MBM's FY23 earnings by 7.1 per cent as it lowered its margin assumption amid higher discounting activities.
