THE new government ruling requiring Proton and Perodua cars to be fitted with airbags for the protection of drivers and rear seatbelts is seen benefiting Hirotako Holdings Bhd, currently the country’s only seatbelt and airbag manufacturer.
In an announcement reported by Bernama, Road Transport Department director-general Datuk Emran Kadir said the Transport Ministry had decided to make it mandatory for all new models produced by national car makers to be fitted with the safety devices from July 1 next year in a move to make locally-made cars on par with those of other regional manufacturers.
Hirotako group chief executive officer Tony Leow Sun Hock was pleasantly surprised by the announcement as the company had proposed the idea to the Government for a long time.
“I am surprised with the announcement but will not make any further assessment until I have seen the official statement,” he said.
As the news had yet to filter through to the equity market yesterday, shares of Hirotako closed at RM1 with barely 3,000 units changing hands,
The normally thinly traded shares are closely held, with Datuk Paduka Dr Saleha Mohd Ali listed as the main shareholder with a total of 40.1 million shares representing a 50.3% stake in the company. Another substantial shareholder is Saleha’s business partner, Lim Hong Liang. The two are said to hold a 44% stake in the company between them.
Hirotako currently produces 10,000 airbags annually but can easily expand its production capacity to the level required by the two national car makers. The company also has two units producing seatbelts.
Leow said the company had agreements to produce airbags for all current Proton models except the Iswara. The contracts also covered the next two Proton models to be launched, he added.
Perodua had yet to have any agreement with Hirotako as it does not install airbags in its cars.
A quick analysis indicated the deal could be worth some RM267mil annually, based on the number of cars sold by Proton and Perodua last year. Each airbag could cost between RM1,000 and RM1,500.
“It is a significant deal for Hirotako,” said an industry analyst at Mayban Securities, adding that it would definitely benefit the company as the sole manufacturer of the device.
Hirotako posted a total revenue of RM109mil last year.
A senior executive of a car component manufacturing company said the deal was “a sure thing” for Hirotako as it would be difficult for newcomers or importers to bring airbags into the country, given that they required a high level of expertise to make.
“This is a safety product and must be tested vigorously before it can be fitted into a car. So Hirotako will have a commanding lead in the industry in the next few years,” he said.