MBM Resources Bhd (MBMR) posted stronger-than-expected earnings for the first half of 2026 (1H26), prompting RHB Research to maintain its BUY recommendation and raise its target price to RM6.10 from RM5.70.
The research house said MBMR’s 1H26 earnings beat expectations, while its 28 sen per share interim dividend was a positive surprise. The revised target price implies an upside of about 21% based on RHB’s assessment.
MBMR’s core profit for the second quarter of 2026 (2Q26) rose 51% quarter-on-quarter (QoQ) and 32% year-on-year (YoY), bringing 1H26 profit after tax and minority interest (PATAMI) to RM159 million, up 11% YoY.
The 1H26 earnings represented about 50% of RHB’s and Street’s full-year estimates. However, RHB considered the performance ahead of expectations given the seasonally stronger car sales anticipated in the second half of the year, noting that historically 1H earnings have accounted for only 43%-44% of full-year earnings.
The positive earnings deviation was mainly driven by a stronger-than-expected contribution from associates.
MBMR declared an interim dividend of 28 sen per share, bringing its payout ratio to 69%, above RHB’s previous assumption of 64%. RHB has consequently raised its full-year dividend forecast to 57 sen per share, while retaining its 64% payout assumption for conservatism.
MBMR’s revenue increased 14% QoQ and 3% YoY to RM620 million in 2Q26, broadly in line with Perodua’s sales volume of 84,062 units, which rose 13% QoQ and 4% YoY amid a higher number of working days during the quarter.
The stronger sales performance also lifted MBMR’s associates’ contribution by 45% QoQ and 40% YoY in 2Q26. For 1H26, associates’ contribution increased 17% YoY to RM153 million, already accounting for 55% of RHB’s full-year forecast.
MBMR’s largest segment, motor trading and assembly, recorded a 12% QoQ increase in revenue and 2% YoY growth. Its earnings before interest and tax (EBIT), meanwhile, more than doubled QoQ to RM12.6 million, although the increase was marginal at 2% YoY.
RHB attributed the improvement primarily to higher sales volumes and favourable foreign exchange movements.
The segment’s EBIT margin stood at 2.4% in 2Q26, compared with 1.8% for 1H26 and 2.2% in 1H25.
RHB expects MBMR to deliver a stronger performance in 2H26, supported by improving Perodua sales and a healthy order backlog.
Perodua’s sales increased 16% month-on-month in July, although they remained 5% lower YoY, which RHB said signalled a recovery in the second half of the year.
Perodua is also scheduled for another plant turnaround in September before the facility is expected to operate at full capacity in 4Q26.
MBMR’s outlook is further supported by a backlog of around 43,000 units. RHB expects the Perodua Traz to provide additional support to sales volumes, with the model among the top 10 best-selling models in 1H26.
The research house estimates the Traz could contribute between 20,000 and 23,000 units, equivalent to around 6% of Perodua’s total sales volume.
RHB maintained its Perodua sales volume forecast at 334,000 units for FY26, representing a 7% YoY decline.
However, it raised its FY26-FY28 earnings forecasts by 8%, 7% and 6%, respectively, reflecting higher contributions from associates despite incorporating lower margin assumptions for the motor segment.
RHB said it continues to favour MBMR for its inexpensive valuation, strong dividend prospects and exposure to Perodua.
The stock is trading at about 5.7 times FY27 forward price-to-earnings, around one standard deviation below its five-year mean, while its estimated FY27 dividend yield of about 11% provides an additional attraction.
RHB’s revised RM6.10 target price is based on an unchanged 7 times FY27 forward PER, in line with MBMR’s five-year mean, and incorporates a 2% environmental, social and governance discount.
“Keep BUY” remains RHB’s call on MBMR, with the research house identifying lower-than-expected vehicle deliveries and lower-than-expected dividend payout ratios as the key risks to its investment view.
