RESEARCH HOUSES RAISE EARNINGS FORECASTS FOR UMW

KUALA LUMPUR, May 25 (Bernama) -- Maybank Investment Bank (Maybank IB) has raised earnings forecasts for UMW Holdings Bhd given positive prospects of its automotive business after a stronger-than-expected first quarter financial year 2022 (Q1 FY2022) results.

The investment bank said UMW’s Q1 core net earnings accounted for 38 per cent of its initial full year estimate amid strong vehicle sales momentum.

It has raised FY2022, FY2023 and FY2024 earnings estimates by 24 per cent, 24 per cent and 23 per cent respectively solely to reflect higher Perodua vehicle sales (6.0 per cent, 4.0 per cent and 4.0 per cent) to 248,000-252,000 units respectively.

“Our earnings upgrade is conservative, for they reflect the disruption to the global supply chain, the risk of no further sales and service tax (SST) waiver extension beyond June 2022 as well as no change to Toyota’s vehicle sales estimate for now.

“We see room to raise earnings, should these risks be lower than anticipated. The order backlog of  Toyota and Perodua combined totals around 100,000 units now (four to six months’ visibility),” it said in a note today.

Kenanga Research has raised core net profit projections for FY2022 and FY2023 by 24 per cent and 22 per cent respectively on stronger backlog in booking despite SST-exemption period drawing closer to an end.

It has also upgraded UMW’s share to outperform from market perform with a higher target price of RM4.40 from RM3.20 previously.

The research house said UMW derives its earnings mostly from the stream of new models such as Vios and facelifted Yaris, Toyota RAV4 CBU, Lexus UX200, Toyota Hilux Rogue, Innova and Fortuner, Toyota Corolla Cross Hybrid, Harrier and its 38 per cent owned Perodua with the all-new launches of Perodua Ativa, refreshed ARUZ, and the Myvi.

For equipment division, the group will continue to leverage on its partners’ (KOMATSU & TICO) strengths and new collaborative robots venture with Universal Robot A/S, while UMW Aerospace is expected to recover during the transition to the endemic phase of COVID-19 and the easing of travel arrangements.

Yesterday, UMW reported net profit jumped to RM101.21 million in the Q1 ended March 31, 2022 from RM79.80 million in Q1 FY2021.

Revenue soared to RM3.65 billion from RM2.95 billion previously, mainly due to the higher sales in all core segments, save for the manufacturing and engineering segments following the disposal of a subsidiary in the prior year.

-- BERNAMA