Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
Research House: HWANGDBS
Automotive companies
Maintain buy calls on Proton, MBM Resources: Total vehicles sales are forecast to grow 8% year-on-year (y-o-y) to 578,000 in 2010, against a 2% decline to 536,000 in 2009. Year-to-date sales in May 2010 grew 20% y-o-y partly due to the low base in 2009 created by the financial crisis. We expect Perodua sales to grow by 8% this year, Proton by 8%, Toyota by 8%, Nissan by 10% and Honda by 6%.
DBS Bank forecasts 8% GDP growth this year for Malaysia, while the ringgit is expected to remain stable against the US dollar in 2H2010, and strengthen against the Japanese yen. Proton is a key beneficiary of the weak yen. Interest rates are expected to rise by another 50 basis points in 2H2010, which will have minimal impact on loan repayment, hence vehicle sales. Sales in 3Q2010 will benefit from consumers rushing to buy new cars ahead of further interest hikes. More importantly, there will be increasing demand for new cars ahead of the Hari Raya Aidilfitri festive season in September. However, demand in 4Q2010 is expected to be seasonally slow. The introduction of new models will drive sales for Proton and Toyota in 2H2010.
Maintain buy on Proton. Proton's share price remains attractive at only 0.45 times CY2011F NTA versus 0.65 times historical average. We maintain our RM4.85 price target based on a conservative 0.5 times CY2011F NTA. Higher utilisation rate of its plants from higher sales (exports and strategic partnership) is a catalyst.
Reiterate buy on MBM with a target price of RM4.05 (six times FY2011F PER). Healthy Perodua sales and a RM20 million budget to beef up showrooms and service centres for its luxury lines (Volvo and VW) are signs of better times ahead. MBM's current PER of only 4.5 times FY2011F is cheap against a historical average of six times and +1SD of 8.5 times. ' HwangDBS Vickers Research, July 7
This article appeared in The Edge Financial Daily, July 8, 2010.
Company Name: PROTON HOLDINGS BHD
Research House: HWANGDBS
Automotive companies
Maintain buy calls on Proton, MBM Resources: Total vehicles sales are forecast to grow 8% year-on-year (y-o-y) to 578,000 in 2010, against a 2% decline to 536,000 in 2009. Year-to-date sales in May 2010 grew 20% y-o-y partly due to the low base in 2009 created by the financial crisis. We expect Perodua sales to grow by 8% this year, Proton by 8%, Toyota by 8%, Nissan by 10% and Honda by 6%.
DBS Bank forecasts 8% GDP growth this year for Malaysia, while the ringgit is expected to remain stable against the US dollar in 2H2010, and strengthen against the Japanese yen. Proton is a key beneficiary of the weak yen. Interest rates are expected to rise by another 50 basis points in 2H2010, which will have minimal impact on loan repayment, hence vehicle sales. Sales in 3Q2010 will benefit from consumers rushing to buy new cars ahead of further interest hikes. More importantly, there will be increasing demand for new cars ahead of the Hari Raya Aidilfitri festive season in September. However, demand in 4Q2010 is expected to be seasonally slow. The introduction of new models will drive sales for Proton and Toyota in 2H2010.
Maintain buy on Proton. Proton's share price remains attractive at only 0.45 times CY2011F NTA versus 0.65 times historical average. We maintain our RM4.85 price target based on a conservative 0.5 times CY2011F NTA. Higher utilisation rate of its plants from higher sales (exports and strategic partnership) is a catalyst.
Reiterate buy on MBM with a target price of RM4.05 (six times FY2011F PER). Healthy Perodua sales and a RM20 million budget to beef up showrooms and service centres for its luxury lines (Volvo and VW) are signs of better times ahead. MBM's current PER of only 4.5 times FY2011F is cheap against a historical average of six times and +1SD of 8.5 times. ' HwangDBS Vickers Research, July 7
This article appeared in The Edge Financial Daily, July 8, 2010.
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