Proton X70
KUALA LUMPUR: Kenanga Investment Bank Research is retaining its market perform for DRB-Hicom with a lower sum-of-parts (SOP) target price of RM2 compared with RM2.35 earlier as it revised its SOP and reduced the target price for Pos Malaysia.
DRB-Hicom reported 1H19 core net loss of RM68mil in the first half ended Sept 30, 2018 compared to core net profit of RM297mil in 1H18, and vs. Kenanga Research/consensus RM351mil/RM56mil full-year net profit forecasts.
“We consider the results to be within our expectation in anticipation of better subsequent quarters, especially with the launching of the all-new Proton X70 on Dec 12,” it said.
The research house said YoY, 1H19 core net loss was dragged down by losses from the automotive sector, particularly from sales revenue foregone following the disposal of Lotus and lower vehicles sales by Proton at 36,390 (-1%), but cushioned by the higher share of profits from associated companies (+14%), namely Honda, which recorded steady sales at 55,733 units (+8%).
Elsewhere, higher revenue contribution by banking segments, Aviation (CTRM), and concession (Puspakom) offset lower contribution from property and logistics segments.
On a QoQ, 2Q19 core net loss of RM1mil narrowed from core net loss of RM67m in 1Q19, mainly due to higher sales (+20%), largely contributed by the automotive sector (+37%) during the zero-rated tax holiday which boosted both Proton units sales at 22,127 units (+55%) and Honda units sales at 28,561 units (+5%) as well as supported by the services sector’s improved contribution.
“Proton’s first sport-utility vehicle (SUV) model, based on Geely’s Boyue platform, known as Proton X70 was on track to be officially rolled out on Dec 12. The first batch is expected to be China-built, while the complete knocked-down (CKD) version will come out somewhere in 2HCY19.
“Proton is in the midst of finalising a 10-year business road map targeting 30% share of the domestic market and 10% of regional market via introduction of new models.
“Specifically, the group is targeting to expand its products portfolio in the A, B, SUV and MPV segments for their export market. A new manufacturing plant in Tanjung Malim will be fully ready in five years’ time, but the first Proton car made with Geely’s technology will roll out by 2019.
“Geely will facilitate Proton in terms of technology and at the same time assemble its four-wheel drive model, artificial intelligent car and develop their right-hand drive technology in Malaysia,” it said.
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