Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
Research House: CIMB
KUALA LUMPUR: CIMB Research has downgraded PROTON HOLDINGS BHD [] to neutral from trading buy at RM4.73 and cut its target price for the stock to RM5.60 (from RM6.30) and said Proton's latest failed attempt to forge a partnership with Volkswagen Ag (VW) was negative news as the research house was banking on a strategic partnership to boost Proton's competitive edge.
Proton is also reported to be contemplating a sale of a 40% stake in its wholly-owned Lotus to its management team as a performance incentive, it said.
The research house said it was neutral on the news as the attractiveness of the sale depended very much on the sale price.
"Since our upgrade of the stock from Neutral to Trading Buy on expectations of positive newsflow on a tie-up with VW and the improvement in its earnings prospects, the share price has risen 26% against 7% for the KLCI.
"Although we are encouraged by Proton's turnaround in financial performance, we think that this has been partly reflected in the recent share price run-up," it said.
CIMB Research said given the negative news and lack of near-term catalysts, it was downgrading the stock to neutral.
"We retain our earnings forecasts but cut our target price from RM6.30 to RM5.60 as we widen the discount to its 10-year historical P/BV of 0.8 times from 20% to 30%.
"Tan Chong (outperform) is our top pick for exposure to the auto sector," it said.
At 9.40am, Proton fell 17 sen to RM4.56 with 171,900 shares traded.
Company Name: PROTON HOLDINGS BHD
Research House: CIMB
KUALA LUMPUR: CIMB Research has downgraded PROTON HOLDINGS BHD [] to neutral from trading buy at RM4.73 and cut its target price for the stock to RM5.60 (from RM6.30) and said Proton's latest failed attempt to forge a partnership with Volkswagen Ag (VW) was negative news as the research house was banking on a strategic partnership to boost Proton's competitive edge.
Proton is also reported to be contemplating a sale of a 40% stake in its wholly-owned Lotus to its management team as a performance incentive, it said.
The research house said it was neutral on the news as the attractiveness of the sale depended very much on the sale price.
"Since our upgrade of the stock from Neutral to Trading Buy on expectations of positive newsflow on a tie-up with VW and the improvement in its earnings prospects, the share price has risen 26% against 7% for the KLCI.
"Although we are encouraged by Proton's turnaround in financial performance, we think that this has been partly reflected in the recent share price run-up," it said.
CIMB Research said given the negative news and lack of near-term catalysts, it was downgrading the stock to neutral.
"We retain our earnings forecasts but cut our target price from RM6.30 to RM5.60 as we widen the discount to its 10-year historical P/BV of 0.8 times from 20% to 30%.
"Tan Chong (outperform) is our top pick for exposure to the auto sector," it said.
At 9.40am, Proton fell 17 sen to RM4.56 with 171,900 shares traded.
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