Auto Group, MBM Resources Profits Soars 2922% Attributing To Sales Tax Exemption

Car sales in Malaysia has somewhat rebounded to pre-Covid era, a couple of reasons can be attributed to this phenomena. One is that most Malaysians love cars and will not hesitate to purchase or replace their mode of transport every five years or earlier, secondly the pent up demand from Hari Raya which was usually a seasonal time for purchasing was disrupted due to MCO and lastly the governments sales tax waiver bringing car prices down. These confluence of reasons is the contributor in car manufacturers recording high volume car sales the last three months, with some even surpassing 2019 targets.

Riding on the euphoria is MBM Resources Berhad, the auto group who trades in passenger and commercial vehicles for various brands, announced a significant revenue and Profit Before Tax improvements over its results from the second quarter. While its current quarter revenue improved by 16.5%, contributions from MBMR’s joint venture entity was higher by 93.1% while the share of MBMR associates’ profit was RM55.4 million, an increase of 2.9%. As a result, MBMR’s profit before tax for the quarter increased by 18.2% to RM79.6 million.

Against the preceding quarter, the Group’s performance from Continuing Operations also showed exceptional improvements with an increase of RM341.9 million or 132.2%, contributed by both Divisions. The increase is due to the strong rebound from the suppressed market condition under the various stages of MCO in the preceding quarter, further boosted by the high demand from the aforementioned sales tax exemption. Consequently, the Group’s profit for the quarter also turned from a loss of RM2.8 million in the preceding quarter to a PBT of RM79.6 million, an increase of RM82.4 million, or 2922.7%.

With automotive manufacturers ramping up production in anticipation of higher demand due to the sales tax exemption on passenger vehicles announced by the Government in its PENJANA initiative, MBMR’s manufacturing division has produced and sold 19.1% more units of various components, totalling to 1.7 million units in Q3 2020 against the corresponding quarter 2019. The strongest growth in the manufacturing division is contributed by Autoliv Hirotako Sdn Bhd, which has seen the demand of its safety equipment grow by 30.3% to 722,000 units in Q3 2020 compared to Q3 2019. The Group’s retail division has also seen an uptick in volume for Q3 2020. The Group sold 8,551 units of passenger and commercial vehicles in Q3 2020, a 124% increase from Q2 2020 and a 31% increase
from the same quarter in 2019. The main contributor for the Q3 2020’s increase in volume is by DMM Sales Sdn Bhd (“DMMS”), a super dealer of Perodua vehicles with 17 sales outlets nationwide. For the first nine months of 2020, DMMS has sold 15,412 Perodua vehicles and has a market share of 10.5% of all new Perodua vehicle sales in the country.

MBMR’s Acting CEO and Group Chief Financial Officer, Ms Annie Chin said, “With the remarkable performance achieved in Q3 2020 and continuous positive customer response seen in Q4 to-date, we are cautiously optimistic on our Q4 2020 prospects as we believe the tax exemptions and incentives by the Government on passenger vehicles will sustain the volume until the end of the year.

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