In its interim financial report, the company said it posted earnings of RM736.57mil compared to a loss of RM309.63mil a year earlier mainly due to the grant to the 50.1%-owned national carmaker and better financial performance of its operating companies
KUALA LUMPUR: Shares of DRB-Hicom fell to a low of RM1.66 on Friday following a RM522.91mil suit filed by China's Goldstar Heavy Industrial Co Ltd over an aborted joint venture with Proton.
At midday, it was down 10 sen to RM1.69 with 6.05 million shares done.
DRB-Hicom announced on Thursday Goldstar had filed a civil complaint against Proton Automobiles (China) Lt and Perusahaan Otombil Nasional Sdn Bhd at the Guandong Higher People's Court. -- nearly a year after the contract was terminated.
In the court, Goldstar claimed 860.61mil renminbi over the aborted plan dated April 17, 2015 to set up a JV company Goldstar Lotus Automobile Co Ltd. The contract was terminated on Jan 22, 2018.
Proton Holdings Bhd, Lotus Group International Ltd and Goldstar are signatories to the contract. DRB-Hicom owns 50.1% of Proton Holdings.
In the Jan 23, 2018 statement provided by DRB-Hicom to Bursa Malaysia on Thursday, the equity JV then was to produce and sell “LOTUS” and also provide after-sales services (including spare parts) in connection with its products in China.
Under the equity JV, the JV company Goldstar Lotus Automobile Co. Ltd (GLAC) was incorporated on Sept 25, 2015. The paid-up of GLAC was 180mil renminbi where Proton Holdings hold a 40% stake, Lotus Group 10% and Goldstar 50%.
However, as GLAC had not yet commenced its business operations since it did not obtain the required manufacturing licence. The deadline to obtain the manufacturing licence pursuant to the EJVC was originally Sept 25, 2017 and subsequently extended by the parties to Dec 31, 2017 as a matter of good faith.
Pursuant to the equity JVC, failure to obtain the said manufacturing licence within the agreed time frame entitled either party to terminate the JV.
DRB-Hicom's 52-week high was RM2.75 on Jan 23, 2018 and its 52-week low of RM1.60 was on Dec 20, 2018.
Following the latest development, Kenanga Research has a market perform at target price of RM1.80 while RHB Research has a buy and TP of RM2.58 and AmInvestment Research a hold with a TP of RM1.99.
Public Investment Reseach has an outperfoirm and TP of RM2.10 and Hong Leong Investment Research a buy with a TP of RM2.80.
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