The recent (early May 2012) price surge
does not reflect the company’s fundamentals. The sharp spike comes on the back
of the company’s announcement of a bonus issue and rights issue and warrants.
The rally is fuelled by speculation that
MBM will expand its business to include automotive assembly in the near future.
The group acquired Kinabalu Motor Assembly Sdn Bhd from Lion Corp in 2011 which
came with assembly license for automobiles. The company can could be holding
off plans to finalize a tie up with a foreign auto player until the government
announces the NAP, which is expected before June 2012. The potential suitors of
MBM will need to evaluate the government’s blueprint for the auto sector.
The group plans to start assembling cars in
small volume first for domestic market before expanding for exports. But
industry observers said the company may have to consider alternative strategies
because Malaysia
’s domestic market is already matured and saturing.
MBM Resources’ automotive parts
manufacturing business has a big potential. This is because the group is the
only airbag manufacturer in Malaysia
through Hiro. The sales of airbags are set to increase with the government
making it mandatory that all new passenger cars must be equipped with the
vehicle safety device.
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