PETALING JAYA: DRB-Hicom Bhd expects to continue leveraging onto the strong automotive segment in financial year 2023 in line with its efforts to continue strengthening its automotive position in Malaysia.
Hong Leong Investment Bank (HLIB) Research said as supply chain issue normalises, DRB-Hicom can leverage on its Proton, Honda, Isuzu and Mitsubishi brands to drive growth in 2023.
The research house noted the increasing industry production volume bodes well with the group’s automotive supply chain and it expects Proton to step up its export programme this year to markets in Africa, South Asia and Asean.
DRB-Hicom’s aerospace and defence segment under Composites Technology Research Malaysia Sdn Bhd (CTRM) is expected to continue ramping up production on increasing global demand for air travel after borders reopened.
The research house noted the conglomerate’s banking arm, Bank Muamalat Malaysia Bhd, will continue to benefit from the recovery of the economy and increasing rate environment.
“However, Pos Malaysia Bhd’s sustainability remains a concern as the segment faces volume decline and competing insourced services,” HLIB Research warned.
DRB-Hicom recorded a revenue of RM4.1bil and a net profit of RM107.9mil or earnings per share of 5.58 sen in the first quarter ended on March 31, 2023 (1Q23).
HLIB Research noted the group’s core profit after taxation and minority interests of RM100.2mil came in below its expectations of 24.7% but within consensus at 30.9%.
The performance was mainly driven by stronger automotive segmental margins, contribution from its automotive associates and services segmental performance which partially offset lower contribution from DRB-HICOM Defence Technologies Sdn Bhd (Deftech).
DRB-Hicom also pointed out that the sales and service tax (SST) exemption policy, together with the economy’s full reopening in April 2022, were major factors behind the stronger 1Q23 results.
On another note, DRB-Hicom told HLIB Research that it expects to launch a new Geely-based sedan model by Proton by year-end or early-2024 following the recent launch of the X90.