Li’s appointment another step towards Proton’s recovery: Research house

PETALING JAYA: CIMB Research is positive on the appointment of Li Chunrong as the new CEO for Perusahaan Otomobil Nasional Sdn Bhd (PONSB), the manufacturing arm of Proton Holdings Bhd, citing it as another step forward towards recovery.

Last Friday, DRB-Hicom Bhd announced the appointment of China national Li, as the new CEO of PONSB effective this month. Li replaced Datuk Ahmad Fuaad Kenali who resigned on Sept 30.

Li will be responsible for the operation of Proton, including the production, manufacturing, quality standards, research and development, sales and marketing.

“Li is a veteran in the automotive industry, having spent his entire 30-year career in it. He has served as an executive with major international automakers, such as Group PSA, Honda, Nissan, Kia and Dongfeng,” CIMB Research said.

“In 10 weeks, he intends to unveil a transformative plan for Proton encompassing eight strategies to improve the group’s operation, with a core focus on customer satisfaction. We understand that he is focusing on improving quality and Proton’s sales network,” it added.

Besides Li’s appointment, DRBHicom and Geely also announced the appointment of new Proton board members who will join chairman Datuk Seri Syed Faisal Albar.

DRB-Hicom nominated two senior executives namely Shaharul Farez Hassan and Amalanathan Thomas while Geely nominated two representatives namely CFO Daniel Donghui Li and Geely Auto chief technology officer Feng Qing Feng.

All five will also sit on the board of PONSB, joined by Dr Nathan Yu Ning, vice-president of Geely’s international operation and Dr Winfried Vahland, former chairman and CEO of Volkswagen unit Skoda.

CIMB Research said Proton’s target to gradually reduce losses and break even in three to four years is achievable as it anticipates more new Proton-Geely cross-platform models in the future. “This will expedite new model introduction and help Proton to save in terms of product development cost. In addition, Proton is expected to benefit from Geely’s latest technology as the latter intends to supply the latest engine and energy solutions to Proton,” it said. For example, Geely is planning to supply Proton with an engine that meets the Euro 6 emission standard, hybrid engines and pure electric engines. These new engines will enable Proton to penetrate other markets across Asean.

Note that Proton is also on track to launch its first mid-sized SUV, which will be based on Geely’s Boyue, by end of 2018.

CIMB Research maintained its “add” call on DRB-Hicom and a target price of RM2.35, with potential re-rating catalysts being narrowing losses at Proton and higher-than-expected profit contribution from the services division.

DRB-Hicom said last Friday that it has completed the proposed entry of Zhejiang Geely Holdings as Proton’s foreign strategic partner following Geely’s subscription of 547 million Proton shares, which makes up a 49.9% stake, for a total subscription price of RM460.3 million.