Proton to develop six versions of engines from 1.0 litres to 1.5 litres
KUALA LUMPUR: Shares of DRB-Hicom rose to a high of RM1.86 early Thursday when it resumed trading following the announcement of China-based Zhejiang Geely Holding Group Co., Ltd as a partner for loss-making Proton Holdings.
At 9.13am, DRB-Hicom was up six sen to RM1.74. There were 15.28 million shares done.
The FBM KLCI rose 3.06 points or 0.17% to 1,774.07. Turnover was 229.23 million shares valued at RM161.48mil. There were 205 gainers, 178 losers and 240 counters unchanged.
Under the agreement signed on Wednesday, DRB-Hicom will partially divest Proton to Geely (through new share issuance) and fully divest Lotus to Geely and Etika Strategy. DRB-Hicom andGeely will own 50.1% and 49.9% stake respectively in Proton.
Hong Leong Investment Bank (HLIB) Research said Proton was valued at RM1.5bil and Lotus at RM560mil.
Proton and Geely will jointly establish a 10-year plan for Proton to reclaim its top position in Malaysia and become third largest OEM in ASEAN in terms of market share.
“Positive on the deal, as DRB-Hicom will get RM560m cash (from disposal of Lotus) and Proton’s non-core assets and investments which include Shah Alam land and Proton City.
“Furthermore, the emergence of Geely as JV in Proton, partially reduce burden on DRB, while DRB can re-focus its resources into other strategic businesses.
“We maintain BUY recommendation with higher Target Price of RM2.58 (from RM2.22) based on 20% discount to sum-of-parts,” it said.
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