MBM RESOURCES INITIATES SHARE BUY-BACK PLAN
19 May 2016
MBM RESOURCES INITIATES SHARE BUY-BACK PLAN
Move reflects company’s confidence in its inherent value, beginning of growth phase
Petaling Jaya (May 19, 2016) – MBM Resources Berhad (MBMR), has announced plans to buy back up to 10 per cent or 39,071,075 of its own issued and paid-up share capital.
Speaking to the media after the company’s 22nd Annual General Meeting, MBMR Group Managing Director, Looi Kok Loon, said that the move was initiated to allow the Company to buy back its shares in times of significant undervaluation.
“We feel that our shares have declined significantly over the last 12 months and is trading at a steep discount to the value of its net tangible asset,” he said.
MBMR Group recorded a 2% growth in revenues to RM1.8 billion in 2015 compared with RM1.7 billion in 2014, helped by the recognising of the one-off contribution from the completion of the new office block, Menara MBMR. Profit before tax (PBT), however fell 2% to RM130.2 million.
Looi pointed out that the company’s diverse investment in every stage of the automotive industry’s value chain was one reason why MBMR Group was able to weather multiple challenges in the previous financial year.
“We draw strength from the diversity in our income streams which provide defensive qualities in the event of further headwinds in the economy and yet well positioned for a rebound in the near future. Many of our investments have been commissioned and we are now entering the growth phase with confidence,” he said.
MBMR Group was not spared from the impact from the implementation of the Goods and Services Tax (GST), tightening credit, a drastic slump in Ringgit value and the resulting knockon effect on both business and consumer confidence. Yet, in numerous instances, it demonstrated great resilience and was able to balance decline with growth.
For example, the 22.2% decline in sales recorded by its multi-brand subsidiary, Federal Auto Holdings Berhad (FAHB), which has dealerships for Volvo, Volkswagen and Mitsubishi passenger cars among others, was mitigated by the 15.6% jump in sales by DMM Sales Sdn Bhd (DMMS), dealer for Perodua, which was driven by the success of the new Axia model. The net impact was that MBMR Group recorded a growth of 8.5% in total vehicle sales, which exceeded the market’s flat performance.
MBMR Group’s aggressive expansion in the defensive, recurring and high-margined aftersales business has also resulted in a significant shift in the balance of profit contribution. While this growth would be driven by new vehicle sales, it has also lessened the Group’s dependence on new vehicle deliveries alone.
Moving forward, MBMR Group’s component manufacturing division is set to enjoy better days ahead with several subsidiaries well-positioned to respond to market trends.
Its investment in an alloy wheel plant in 2012 is showing further improvement. The plant in Rawang is poised to benefit from the automotive industry’s unabated shift from steel to alloy wheels with production volume at Oriental Metal Industries (M) Sdn Bhd (OMI) set to rise from 139,000 units in 2015 to more than 300,000 this year on the back of new contracts secured from Perodua, Volkswagen and several other customers.
Autoliv Hirotako Sdn Bhd (AHSB), 51% owned via its subsidiary, Hirotako Holdings Berhad, is a leading supplier of safety restraint systems. It has won significant new supply orders from major customers and is set to enjoy the growing emphasis on safety in the new product launches by car companies with increased fitment rates of passive safety products.
“We believe that we have established very clear strategies in our vision of being The Complete Automotive Group. Our investments of recent years have been very calculated and positioned us to benefit from changing trends in the automotive market,” said Looi. Ends.
MBMR is a diverse automotive group that represents some of the biggest international brands in
Malaysia. They include commercial vehicle brands Daihatsu, HINO and Iveco; passenger car brands Perodua, Volvo, Volkswagen and Mitsubishi; and sports tuning brands, ABT and HeicoSportiv, and carcare brand Williams.
MBMR is the leader in every market segment it competes in, with products that range from light, medium and heavy duty trucks and buses to entry-level compact cars and luxury vehicles.
MBMR aspires to be one of the leading and most complete automotive groups in Malaysia with a full spectrum of capabilities that include manufacturing and assembly, distribution, retail and dealerships, parts and accessories, body and paint repair and customer services.
For more information on MBM Resources Berhad, please visit www.mbmr.com.my.
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