UMW says no plans to raise offer for MBM Resources, allocates RM600m for 3 core segments

SHAH ALAM: UMW Holdings Bhd, which has no intention to raise its takeover offer price for MBM Resources Bhd, has budgeted RM600 million in capital expenditure (capex) for its three core segments after its full exit from the oil and gas business within the year.
Of that, RM200 million will be for the automotive and equipment segments each, RM100 million for manufacturing and engineering, and the remaining RM100 million for the aerospace expansion plan in Serendah, Selangor.
"On the Serendah land, we have a high value manufacturing plant there, so we try to expand in that area," UMW president and group CEO Badrul Feisal Abdul Rahim told a press conference after its AGM here today.
He believes the "worst is over" for the group, but it will take some time before reaching what it had achieved prior to 2014. "It will take time but definitely it will be in the black."
UMW's net profit jumped nearly four times to RM74.08 million for the first quarter ended March 31, 2018 against RM20.17 million in the previous corresponding period.
Badrul Feisal said the group's second new Toyota plant is expected to be completed by year-end and be operational early next year.
Automotive is the largest revenue contributor for UMW, but he cautioned that Toyota has been facing stiff competition, especially from Honda, despite new model launches this year.
Toyota car sales in Malaysia are estimated at 70,000 units this year, while Perodua is expected to sell 209,000 units.
With the replacement of the Goods and Services Tax by the Sales and Services Tax, Badrul Feisal said car prices will probably increase.
For the manufacturing and engineering segment, he revealed that the group plans to expand into medical device manufacturing.
UMW is unfazed by the review of mega projects in the country as a result of the change in the federal government, as 70% of its heavy equipment orders are derived from the overseas markets.
On the MBM bid, Badrul Feisal said UMW has not changed its mind on the offer price despite numerous rejections.
"We've extended the offer period. It's up to them to evaluate whether to sell or not. We still stick to the position (of not raising the offer price), until a time when it is suitable to address."
MBM has stood firm on not accepting the deal due to the "unreasonable" pricing of RM501 million or RM2.56 per share, despite major shareholder Med-Bumikar Mara Sdn Bhd reportedly expressing interest in disposing of the stake.
Last month, UMW Holdings Bhd extended its takeover offer period for MBM by six months, from April 30 till Oct 31. The jewel in MBM is its 22.58% stake in Perusahaan Otomobil Kedua Sdn Bhd (Perodua).
An extension was also given to PNB Equity Resource Corporation Sdn Bhd, which owns 10% of Perodua. UMW has yet to receive a response.