MBM Resources Bhd’s (MBM) third quarter of financial year 2023 (3QFY23) results have seen a strong rebound with its core net profit (CNP) jumped 47 per cent quarter on quarter (qo-q) or 26.8 per cent year on year (y-o-y) to RM76.4 million.

MBM’s CNP does not include a RM28.4 million one-off gain from land disposal during the quarter.

According to the research arm of Midf Amanah Investment Bank Bhd

(MIDF Research), the earnings rebound was mainly driven by higher contribution from its associates as its 20 per cent owned Perusahaan Otomobil Kedua Sdn Bhd (Perodua) saw a record quarter with its total inventory volume (TIV) rising by 28.3 per cent y-o-y to 88,541 units.

The robust quarter by Perodua caused MBM’s associate contribution to rise by 49.3 per cent y-o-y to RM69.7 million but this was partially offset by weaker earnings from both its motor trading and part manufacturing divisions as sales volume of Volva and VW models continued to slow.

The group’s pre-tax income increased by 66.9 per cent y-o-y but its CNP growth was narrower at 26.8 per cent y-o-y due to higher discounting which led to lower margins.

Overall, the group’s first nine months of financial year 2023 (9MFY23) exceeded expectations as it met 85 and 81 per cent of MIDF Research’s and consensus full-year earnings estimates.

Additionally, MBM also declared a second interim dividend of 6 sen and a special dividend of 7sen which brought its 9MFY23 dividend to 39 sen.

“This is a positive surprise as MBM typically announced dividend in 2Q and 4Q. We reckon the exceptional dividends are supported by sale of land announced in 3QFY23,” the research arm guided.

And looking ahead, the analyst expects MBM earnings to be firmly anchored by Perodua’s contribution over the next few quarters as the vehicle marque clears its robust backlog of orders.

To reflect the higher Perodua TIV, the research arm has lifted its FY23F net profit forecast for MBM by 10.5 per cent to RM269.7 million.

They however only raise their FY24 net profit forecast by 0.9 per cent to RM247.1 million as they expect Perodua’s TIV to gradually normalise in FY24.