‘X70 TO DRIVE DRB-HICOM EARNINGS’
Kenanga Research maintains ‘market perform’ call on firm, with lower target price of RM2 a share
PROTON’S first sportutility vehicle (SUV) model based on Geely’s Boyue platform, the Proton X70, is expected to be the main earnings contributor for DRB-HICOM Bhd.
Kenanga Research said the Proton X70 is on track to be officially rolled out on December 12, with the first batch expected to be made in China, followed by the complete knocked-down version in the second half of next year.
“Proton is in the midst of finalising a 10-year business road map, targeting 30 per cent share of the domestic market and 10 per cent of regional market via the introduction of new models,” it said in a research note.
The research firm said DRBHICOM targets to expand its products portfolio in the A, B, SUV and multi-purpose vehicle segments for the export market.
“A new manufacturing plant in Tanjung Malim, Perak, will be ready in five years, but the first Proton car with Geely’s technology will be rolled out by next year.”
Kenanga Research said Geely will facilitate Proton in terms of technology while assembling its four-wheel drive models and artificial intelligent cars, and developing right-hand-drive technology in Malaysia.
Kenanga Research has maintained a “market perform” call on DRB-HICOM, with a lower target price of RM2 from RM2.35 a share previously.
One of the key risks to its call is slower-than-expected roll-out of new models under the new GeelyProton management.
Public Investment Bank, meanwhile, anticipates stronger improvements for DRB-HICOM, supported by the new Proton SUV, which in turn would improve the group’s overall sales performance in the automotive division.
“We are keeping our forecasts and maintaining our‘ out perform’ call on DR B-HI COM with an unchanged target price of RM2.40.”
DRB-HICOM posted a net loss of RM11.42 million in the secondquarter ended September 30, against a net profit of RM742.59 million in the same quarter a year ago.
It said the operating losses for the quarter was mainly due to lower performance of certain companies in the automotive and services sectors. Revenue in Q2 dropped marginally to RM3.18 billion from RM3.24 billion due to lower sales by automotive and property sectors.