Maybank IB’s latest ESG assessment noted that MBM Resources falls short of a framework and tangible mid/long-term targets, and disclosures on matters relating to Environmental and Social. This has led to a below-average rating of 31
(out of 100) per the bank’s proprietary ESG scoring methodology.
However, on the positive side, MBM is taking active steps to reduce carbon emissions and reduce external water usage. Maybank IB maintain its earnings forecasts and target price of MYR3.95 for MBM, based on a 6x FY24E PER (mean). Maintain HOLD.
Among the automotive sector coverage, MBM scores the least in the proprietary ESG scoring methodology. Key shortfalls are lack of disclosure on its “E” and “S” parameters, such as carbon emissions & intensity, renewable energy use, group EV sales contribution; and detailed quantification on employees training and lost time injury rate monitoring.
Positively, the house noticed efforts in maintaining its scheduled waste intensity and water consumption intensity, as well as increased women participation in the group’s leadership roles.
Also lack on tangible ESG targets
MBM lacks tangible short-/mid-/long-term ESG targets and lacks an actionable sustainability blueprint, including carbon emissions and renewable energy transition targets on group level. Its ESG reporting and tracking are fragmented, reported based on business segments rather than a consolidated group.
Cautious on FY24E outlook on normalising TIV
While the house recognises P2’s strong performance in 2023, it adopts a cautious stance regarding 2024E, aligning with expectations of a normalized TIV.
Anticipated challenges such as higher interest rates, fuel subsidy rationalisation, and increased service taxes prompt us to project P2 sales to normalise to 270k units in FY24E, down from c.330k units in 2023.
Rerating catalysts include stronger-than-expected 2024E P2 sales and potential monetization of the unit, crystallizing the group’s 20% stake.
