MORNING CALL:1/9/23

Despite better numbers, MIDF thinks UMW shareholders should accept the inevitable

Transcript

00:00 Welcome to the first day of September where we look at reports on UMW, currently the subject

00:06 of the largest auto deal in the country.

00:08 Aside from that, it did recently announce its earnings, which MIDF is saying was ahead

00:12 of estimates.

00:14 So earnings first.

00:15 UMW's first half result was ahead of expectations thanks to the stronger than expected equipment

00:19 demand and margins.

00:21 First half core earnings came in at $261 million, which is higher by 25% year on year.

00:28 Group second Q core earnings were up 18%, driven mainly by the equipment and M&E divisions.

00:34 MIDF's fair value is actually raised to RM4.84 and better earnings notwithstanding, the research

00:39 house sticks to its recommendation for investors to accept Symedarby's buyout offer at RM5.

00:45 Broadly, MIDF believes UMW has had a good run since the draw of the auto demand cycle

00:50 back in 2020.

00:52 2023 is expected to see TIV hit another record high for the second year running, mainly driven

00:58 by Perdua.

00:59 MIDF sees this buyout offer as a good opportunity for UMW's minorities to exit at peak auto

01:05 demand cycle.

01:07 According to Bloomberg data, there are eight buys/accept the offer calls on UMW, with three

01:11 holes and one sell from JFAPEX.

01:14 While there are some outliers, most have stuck to Symedarby's offer of RM5 as their fair

01:19 values, which is why it is no surprise that the average target price is RM5.07.

01:24 This is RM0.30 more than its last close of RM4.77.

01:28 Thanks for watching!