MIDF Research expects MBM Resource's (MBM) automotive safety equipment manufacturing arm, Hirotako Holdings Bhd, to contribute 24 per cent to MBM's pre-tax profit in 2013.
It said production in Hirotako was expected to increase for both Perodua and Proton ahead of the festive seasons coupled by the additional airbag volume orders.
"This is in compliance with the airbag policy which took effect on July 1, 2012.
"Hence, Hirotako's overall production volume and earnings are expected to be boosted in the second half of the year," MIDF said in its research note.
Both national car makers are Hirotako's biggest customers.
It said a depressed earnings contribution from Hirotako was mainly due to the drop in Proton's production volume by 18.6 per cent, year-on-year, in the second half of the year.
On other developments, MIDF believed MBM would continue expanding its distributorship network for Federal Auto going forward, which has already been aggressively growing its market share.
It said Federal Auto expected a higher sales volume as Volkswagen continued to grow its presence with additional Volkswagen dealerships in Alor Setar and Johor Baharu, and there would be two upcoming new launches soon, both of which are expected to see encouraging demand.
The research house maintained a "buy" call on MBM's shares with a target price of RM4.53.-- BERNAMA
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