Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
Research House: OSK
Proton Holdings Bhd
(May 26, RM3.45)
Maintain trading buy with lower fair value of RM3.89 (from RM4.78): Proton's earnings for FY11 ended March 31 were below our and consensus numbers despite a stronger 4Q.
The national carmaker may be in for an unexciting FY12 given the lack of a significant product line-up. Proton is targeting to launch the Persona replacement sometime early next year but we do not discount the possibility of a further delay as it seeks cheaper alternative sources of parts to reduce the overall bill for materials.
We cut our export numbers by 50% as management has guided for flat growth at best, which effectively trims our revenue by 18% and earnings by 21%.
We maintain our 'trading buy' call with fair value cut to RM3.89 (from RM4.78), premised on the sector multiple of 10 times.
Proton posted a FY11 net profit of RM152.1 million on the back of RM8.98 billion revenue, which grew by 9.2% year-on-year on the back of higher vehicle sales on the domestic side while export volume was flat. Its earnings, however, fell short of our and consensus estimates due to the losses incurred by Lotus, largely from its kitchen sinking exercise.
Although Proton did not disclose the amount of impairment, we think its core net profit could have been pretty much in line.
This year's model pipeline could be limited to facelifts of the Exora and Saga.
Revenue will be boosted by the after sales and spare parts markets while earnings will be enhanced by its ongoing cost efficiency initiatives.
We understand that an MoU with Nissan on cooperating on the use of Nissan's platform and power train remains ongoing and an announcement is expected sometime in June as the two have yet to finalise the commercial agreement.
We do not see any excitement for FY12 given the absence of a significant product line-up. Proton's exports are likely to remain flattish at best as it is a cost burden to Proton given the high bill of materials cost.
We downgrade our earnings forecast for FY12 by 21% on the 50% cut in export volume and and 18% in revenue.
Despite the downward revision in fair value to RM3.89 from RM4.78 (premised on the sector multiple of 10 times), there is still sufficient upside, hence we are maintaining our 'trading buy' call. ' OSK Research, May 26
This article appeared in The Edge Financial Daily, May 27, 2011.
Company Name: PROTON HOLDINGS BHD
Research House: OSK
Proton Holdings Bhd
(May 26, RM3.45)
Maintain trading buy with lower fair value of RM3.89 (from RM4.78): Proton's earnings for FY11 ended March 31 were below our and consensus numbers despite a stronger 4Q.
The national carmaker may be in for an unexciting FY12 given the lack of a significant product line-up. Proton is targeting to launch the Persona replacement sometime early next year but we do not discount the possibility of a further delay as it seeks cheaper alternative sources of parts to reduce the overall bill for materials.
We cut our export numbers by 50% as management has guided for flat growth at best, which effectively trims our revenue by 18% and earnings by 21%.
We maintain our 'trading buy' call with fair value cut to RM3.89 (from RM4.78), premised on the sector multiple of 10 times.
Proton posted a FY11 net profit of RM152.1 million on the back of RM8.98 billion revenue, which grew by 9.2% year-on-year on the back of higher vehicle sales on the domestic side while export volume was flat. Its earnings, however, fell short of our and consensus estimates due to the losses incurred by Lotus, largely from its kitchen sinking exercise.
Although Proton did not disclose the amount of impairment, we think its core net profit could have been pretty much in line.
This year's model pipeline could be limited to facelifts of the Exora and Saga.
Revenue will be boosted by the after sales and spare parts markets while earnings will be enhanced by its ongoing cost efficiency initiatives.
We understand that an MoU with Nissan on cooperating on the use of Nissan's platform and power train remains ongoing and an announcement is expected sometime in June as the two have yet to finalise the commercial agreement.
We do not see any excitement for FY12 given the absence of a significant product line-up. Proton's exports are likely to remain flattish at best as it is a cost burden to Proton given the high bill of materials cost.
We downgrade our earnings forecast for FY12 by 21% on the 50% cut in export volume and and 18% in revenue.
Despite the downward revision in fair value to RM3.89 from RM4.78 (premised on the sector multiple of 10 times), there is still sufficient upside, hence we are maintaining our 'trading buy' call. ' OSK Research, May 26
This article appeared in The Edge Financial Daily, May 27, 2011.
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