2Q19 marks the second consecutive quarter of losses by the company. The highly anticipated Encore Melaka has failed to live up to investors’ expectations. Even after reducing their average ticket price to only RM75 in 2Q19 from RM110 in 1Q19, Encore Melaka still failed to bring in the expected numbers of spectators. Average utilisation rate was only around 10%. This translate to a ticket revenue of only RM2.5mil. The company has blamed the fewer than expected Chinese tourist to Melaka as the main reason for the underperformance. Investors need to be prepared for the company to post further losses in the remaining FY19. The trend of the core losses would only be reverse if the utilisation rate of Encore Melaka can increase substantially (which at the moment has a very low probability of happening).
With cash reserves of only RM6.7mil and current debt of more than RM80mil, the company was forced to raised more capital via a private placement exercise. However, this exercise is only expected to raise less than RM20mil. Most likely the company will try to refinance the debt (but highly likely that it would be at a higher interest rate due to the company’s weak financials).
MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.4x PE based on FY18 profit of RM166mil. PB is low at only 0.7x BV.
FY19 should deliver another profit growth year to the company. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).
MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.3x which is a lot lower than the industry average of 15x PE. As an example, UMW (another company with exposure to Perodua) is currently trading at a PE multiple of almost 20x.
TQ commonsense for your comments here on MBMR but please compare apple with apple n not apple with orange. MBMR is involved in automobile business whereas Yong Tai is on tourism n property. N due to their differences in both business n financial performances, one is price at RM2.70 whereas the other is RM0.355 !!!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Jiahui Foo
3,335 posts
Posted by Jiahui Foo > 2019-03-14 21:47 | Report Abuse
I start admire u, TYS. U always surprise us.......