RHB Sector Update - Motor

Stock Name: MBMR
Company Name: MBM RESOURCES BHD

Research House: RHB

Price Call: BUY

Target Price: 5.05

Stock Name: TCHONG
Company Name: TAN CHONG MOTOR HOLDINGS BHD

Research House: RHB

Price Call: HOLD

Target Price: 4.20

Stock Name: UMW
Company Name: UMW HOLDINGS BHD

Research House: RHB

Price Call: HOLD

Target Price: 7.30

Stock Name: APM
Company Name: APM AUTOMOTIVE HOLDINGS BHD

Research House: RHB

Price Call: HOLD

Target Price: 4.50

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: RHB

Price Call: HOLD

Target Price: 5.50

Stock Name: DRBHCOM
Company Name: DRB-HICOM BHD

Research House: RHB

Price Call: BUY

Target Price: 3.45

Motor ' Awaiting NAP v3.0                                                                                                 Neutral

Sector Update

MBM Resources ' Fair value RM5.05                                                                           Outperform

Tan Chong ' Fair value RM4.20                                                                             Market Perform

UMW ' Fair value RM7.30                                                                                      Market Perform

APM ' Fair value RM4.50                                                                                       Market Perform

Proton ' Fair value RM5.50                                                                                      Market Perform

DRB-HICOM ' Fair value RM3.45                                                                                    Outperform

-          The auto industry made a shaky start to 2012 with total industry volume (TIV) in Jan declining 14.7% and 25.2% mom and yoy respectively. The softer sales were attributed to seasonal factors given the earlier than usual Lunar New Year holidays, the more stringent financing guidelines implemented by Bank Negara Malaysia (BNM) and the lingering effects of component supply disruption arising from the floods in Thailand .

Source: RHB Research - 5 April 2012

PROTON - Proton Preve (P3-21A) to be launched on April 16

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: HWANGDBS

Price Call: HOLD

Target Price: 5.50

Proton; Hold; RM5.48
Price Target: RM5.50; PROH MK

According to the local media, managing director Datuk Seri Syed Zainal Abidin has revealed details on the newly anticipated model, P3-21A (officially named as Proton Preve) yesterday. Proton Preve will be launched on April 16 at a price tag of between RM62k (for an entry level model with manual transmission) and RM75k (for its high specifications model). There is also a medium line unit which may be sold for less than RM70k.

According to Proton's managing director, the new model ' which costs RM540m to be developed ' is expected to rake in monthly sales of 4k-5k units.

The company's sales projections are above our conservative total sales forecast of 8k-10k units of Proton Preve this year, as demand could be held back by a possible production capacity constraint. Based on an ASP of RM68.5k, we estimate the 8k-10k unit sales will translate to a revenue contribution of RM548m- RM685m (or 5.3%-6.6%) of our FY13F's topline earnings of RM10.4bn.

Meanwhile, in an announcement made to Bursa yesterday, the unconditional takeover offer by DRBHICOM to acquire all the remaining shares in Proton at RM5.50 per share will close on April 25.

We maintain our Hold rating for Proton with RM5.50 TP (which is pegged to the offer price).

Source: HwangDBS Research - 5 April 2012

PROTON - RM62k-RM75k price tag for P3-21A

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: HWANGDBS

Price Call: HOLD

Target Price: 5.50

Proton; Hold; RM5.43
Price Target: RM5.50; PROH MK

Proton has unveiled its expected price tag of RM62k-RM75k for its upcoming P3-21A model which is scheduled to launch in April. The pricing is positioned between the Persona and Inspira model which cost about RM49k-RM59k and RM78k-RM91k respectively.

In 2011, Persona has sold 46,415 units while the Inspira, which was launched towards the end of the year, sold 9,840 units. We expect a portion of potential buyers who initially opt for the Persona and Inspira to shift their purchases to the P3-21A given the close range of pricing. Therefore, we are forecasting about 8k-10k units to be sold this year given the less favourable outlook for the industry and production might not match up with the demand. Based on ASP of RM68.5k, this will translate into sales contribution of RM548m-RM685m (5.3%-6.6%) of our FY13F's topline earnings of RM10.4bn.

We maintain our Hold rating for Proton with RM5.50 TP pegged at the offer price. The 42.7% stake acquisition by DRB-HICOM is expected to complete within 6 days from today; resulting in Proton being a 50.01%-owned subsidiary.

Proton (Hold) - Proton 3-21A- Arriving Soon

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: HLG

Price Call: HOLD

Target Price: 5.50

Proton (Hold)

Proton 3-21A- Arriving Soon

Analysts were given opportunity to testdrive Proton's P3-21A 1.6L or better known as Persona Replacement model We were impressed by P3-21A performances, showing great improvements ascompared to previous Proton's model.

Great efforts were being put into thesafety features of P3-21A in meeting ECE safety requirements.

P3-21A is targeted towards medium to highincome group.

The development cost of P3-21A is relatively low atRM300m for it uses the existing platform and engine from Exora. Hence, weexpect the car to garner higher margins.

Despite the great performance by P3-21A, the pricingwill remain as a major determinant in car sales volume. Furthermore, theresponsible lending guideline is expected hit low-mid end car sales especially Protonand Perodua.

We view the fuel consumptions of ~19sen/kmas relatively high as increasing number of consumers are giving more emphasizeon fuel efficiency.

Maintain Hold with TP of RM5.50.

Source: HLIB Research 12 March 2012

P3-21A…testing the limit

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: MIDF

Price Call: HOLD

Target Price: 5.50

Proton Holdings - UNDERPERFORM - 12 March 2012

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: KENANGA

Price Call: SELL

Target Price: 3.11

We did a test-drive of Proton's upcoming new C segment sedancodenamed P321A last Friday. This new replacement model, which is expected tobe launched next month, will be priced slightly higher than the existingPersona model. Although the price of the P321A is slightly more expensive, itsnew features such as 1.6L turbo engine, stronger body frame via HPF, paddleshifter and others are still  likely appealto both family and young car buyers alike in our view. We actually expectbetter sales for Proton from the P321A, what with its enhanced features above.That  said, we are still recommending an'Accept Offer @ RM5.50' (with implied PNTA of 0.9x) for the stock based on  our Target Price of just RM3.11 (0.5x P/NTAFY12 NTA/share). Our UNDERPERFORM call is also retained. 

P321A test drive.  We test drove the upcoming new C segment sedancodenamed P321A, which will replace the Proton Persona, last Friday. The newmodel is expected to be launched in April 2012 and will be priced slightlyhigher than the existing Persona model. We understand that it is a familysedan, targeting married male in the late 20s to 40s who are looking for anadditional car and a replacement car, as well as targeting medium to highhousehold income of RM5,000 to RM8,000 per month. In addition, Proton is alsotargeting single young professionals or executives who prefer sporty andperformance cars with the P321A.

The features.  The P321A has an enhanced safety feature withfour airbags. Apart from that, its body frame has also been strengthened via aprocess called Hot Press Forming  (HPF).This new high technology process is the first in Malaysia and South East Asia.The car can withstand a force of 1,500 mega Pascal. On the engine part, itcomes with a 1.6L Charged Fuel Efficiency (CFE) engine, which can beturbocharged to match 1.8L to  2.0L performance.Together with the engine, it has the Continuous Variable Transmission (CVT)technology which allows the car to change gear ratios seamlessly, eliminatingtransmission shock and facilitating a greater responsiveness and a smoothconsistent power delivery. The car also offers three driving modes namelyeconomy mode, sport mode and SAT mode to suit the driver's preference and feel. 

Worth buying? Althoughthe price of the P321A is slightly more expensive, its new features such as the1.6L turbo engine, stronger body frame via HPF, shift lever with tiptronicmodeand paddle shifteras well as its spacious 508L boot space that can normally be foundin higher range cars. Therefore, it is likely to appeal to both family andyoung car buyers alike in our view. We,in fact, expect better sales for Protonfrom the P321A with its new enhanced features and we believe its lower pricetag comparatively may hive off some market shares from its fellow competitorsin the segment (such as Vios and City). 

Valuation. Weare, however, maintaining our earnings, and target price of RM3.11 for Protonbased on a historical PNTA of 0.5x on its FY12 NTA/share. Our UNDERPERFORMrecommendation on Proton is also maintained. Until further clarity unfolds viathe offer document (no tentative date as yet), our current recommendation forinvestors for the stock is still to 'Accept Offer @ RM5.50' (with implied PNTAof 0.9x) based on our lower target price and UNDERPERFORM call above.

Source: Kenanga

PROTON (FV RM5.50 - NEUTRAL) 9MFY12 Results Review: Sinking Into The Red

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: OSK

Price Call: HOLD

Target Price: 5.50

Proton dipped back into the red amid weak domestic sales andpersistent losses from Lotus. The immediate-term outlook will remain weak inview of the tighter lending measures imposed by the central bank. Aftertrimming our revenue forecast on the back of the deteriorating vehicle salesoutlook, we now project that Proton will continue to be loss making for twoconsecutive years. With DRB Hicom's takeover price of RM5.50 in place, wemaintain our NEUTRAL rating on the stock.

Low sales  exacerbate losses. With the number ofvehicles sold hitting only 34,218 units (q-o-q: -12.7%, y-o-y:  -7.4%, YTD:  -2.9%), its lowest level since 1QFY09, the nationalcar manufacturer took a sharp hit on its topline (q-o-q:  -36.7%, y-o-y: -21.9%, YTD:  -6.8%). With Lotus still mired in losses  (albeit narrowed to RM36.7m this quarter fromRM130m in the previous quarter), Proton saw its first set of losses for the yearamounting to RM88.2m. For the year, 9M YTD losses stood at RM68.1m  vs our and consensus full-year net profitestimates of RM60.8-RM64.5m. Similarly, its revenue missed our estimate by 15%,which could  be attributed to thedeclining  export market volume.  

Cutting estimates.Following its 3Q loss, we expect Proton to sink into the red for two years in arow. We now forecast a net loss of RM86m after revising our FY12 revenue down  by 7%, noting that vehicle sales will  remain under pressure  owing to the sharp decline in hire purchaseapproval rates. Effective  from 1Jan  2012, Bank Negara Malaysiaimplemented a debt service ratio based on net income instead of gross income thatall banks must follow. This new  rulingby the central bank has  led to  a sharp deterioration in approval rates, ofwhich the Proton dealership association estimates  to have dropped to 30% from 48%. For FY13, wehave toned down our profit forecast by 18%.

Synergy with DRB?While we have yet to obtain any further details on DRB's plan for Proton, wereckon that any synergies for Proton would largely depend on whether DRB canbring Volkswagen  into the picture andthereby, boosting the  utilization rateof its Tanjung Malim plant. Note that Proton's earlier  immediate-termplans, i.e. tie-ups with Mitsubishi and Hawtai, have been put on hold pendingthe takeover move by DRB.

Maintain NEUTRAL.With DRB Hicom's takeover price of RM5.50 in place, we maintain our NEUTRALrating on the stock.

Source: OSK188

Proton (HOLD) - Below Expectations

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: HLG

Price Call: HOLD

Target Price: 5.50

Proton (HOLD)

Below Expectations

• Reported 3QFY3/12 core losses of RM102.5m, taking 9M12 to core losses ofRM79.8m, below HLIB's FY12 forecast profit of RM82m and consensus of RM64.5m.
• Proton car sales dropped significantly in 3Q12, underheavy competition from Perodua's new MyVi. Furthermore, the changes of carsales mix to lower end had lowered Proton's overall revenue.
• Revenue from Lotus units also trended down in 3Q12 due to restructuringexercise and the on-going economy crisis in the Europeand US.
• The acquisition exercise of Proton by DRB Hicom isexpected to be complete by end Mar 2012, and Proton will be delisted from Bursa Malaysia.
• We maintained our forecast with a HOLD recommendationand unchanged TP of RM5.50 (General offer price by DRB). 

Source: HLIB Research 1 March 2012 

The ride is still bumpy

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: MIDF

Price Call: HOLD

Target Price: 5.50

RHBInvest Research Highlights 18th January 2012

Stock Name: IJM
Company Name: IJM CORPORATION BHD

Research House: RHB

Price Call: SELL

Target Price: 4.48

Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD

Research House: RHB

Price Call: HOLD

Target Price: 6.50

Stock Name: AXREIT
Company Name: AXIS REITS

Research House: RHB

Price Call: HOLD

Target Price: 2.72

Stock Name: FAJAR
Company Name: FAJARBARU BUILDER GRP BHD

Research House: RHB

Price Call: HOLD

Target Price: 0.86

Stock Name: MBMR
Company Name: MBM RESOURCES BHD

Research House: RHB

Price Call: BUY

Target Price: 3.90

Stock Name: TCHONG
Company Name: TAN CHONG MOTOR HOLDINGS BHD

Research House: RHB

Price Call: HOLD

Target Price: 4.40

Stock Name: UMW
Company Name: UMW HOLDINGS BHD

Research House: RHB

Price Call: SELL

Target Price: 6.20

Stock Name: APM
Company Name: APM AUTOMOTIVE HOLDINGS BHD

Research House: RHB

Price Call: HOLD

Target Price: 4.30

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: RHB

Price Call: HOLD

Target Price: 5.50

Stock Name: DRBHCOM
Company Name: DRB-HICOM BHD

Research House: RHB

Price Call: HOLD

Target Price: 2.20

18th January 2012

 

Top Story

IJM Corp ' Kajang- Seremban Highway not living up a cash cow                                  Underperform Company Update -          FY03/12-14 net profit forecasts are trimmed by 3% p.a., having imputed share of RM20m net loss p.a. from Lekas. Fair value reduced by 2% from RM4.59 to RM4.48. Maintain Underperform. -          Related story : IJM Corp Results/Briefing Note ' 1HFY03/12 Core Net Profit Grows 11% YoY, Slight Delays In WCE and NPE Extension (29 Nov 2011)

Sector Update

Motor ' A better 2012                                                                                                Underweight Sector Update MBM Resources ' Fair value RM3.90                                                                           Outperform Tan Chong ' Fair value RM4.40                                                                             Market Perform UMW ' Fair value RM6.20                                                                                        Underperform APM ' Fair value RM4.30                                                                                       Market Perform Proton ' Fair value RM5.50                                                                                   Market Perform DRB-HICOM ' Fair value RM2.20                                                                           Market Perform -          MAA (Malaysian Automotive Association) guidance is for Jan 2012 vehicle sales to improve slightly given ongoing promotional campaigns and the seasonal rush to deliver new vehicles ahead of the Lunar New Year holidays. We are revising our 2012 TIV forecast to 612,000 units (+2% yoy) from 607,000 units on the back of RHBRI's 3.6% GDP growth forecast and 5.3% rise in consumption spending. -          Related story: Motor Sector Update  ' Seasonal Slump And Floods Hit Sales (20 Dec 2011)

Corporate Highlights

TNB ' On recovery path                                                                                         Market Perform Results / Briefing Note -          FY12 core earnings forecast raised by 22% after imputing an additional 50 mmscfd of gas to be received by TNB beginning Mar. Fair value revised to RM6.50 (from RM6.15) based on unchanged target CY12 PER of 15x.  Maintain Market Perform. -          Related story: TNB Results Preview  ' Slight improvement in 1Q (16 Jan 2012)   Axis REIT ' More asset acquisitions in the pipeline                                                 Market Perform Briefing Note -          Axis REIT is currently looking at 11 potential assets totalling RM545m that could be injected into the REIT over the next 2 years, with half targeted to be acquired by end-2012. -          Our EPS forecasts have been revised slightly by 0.8-1.1% for FY12-14 after we factor in lower interest expenses. We raise our fair value slightly to RM2.72 (from Rm2.70) after revising our FY12 DPU estimates. Maintain market Perform. -          Related stories: Axis REIT 4Q11 Results Note ' Total DPU of 17.2 sen for FY11 (17 Jan 2011); Axis REIT News Update ' Acquisition in Bayan Lepas (27 Oct 2011); Axis REIT News Update ' New Acquisition in Penang (29 Sep 2011)   Fajarbaru ' Completes private placement of 15m new shares at RM0.90/share         Market Perform Company Update -          Fajarbaru has completed a private placement of 15m new shares at RM0.90 per share.  -          The RM13.5m gross proceeds from the exercise will increase its net cash of RM24.2m as at 31 -          Fair value is reduced by 5% from RM0.91 to RM0.86.  Maintain Market Perform. -          Related story: Fajarbaru News Update  ' Lands RM62m Sewerage Treatment Plant Job In Selangor (22 Dec 2011)

Win-win solution for all?

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: MIDF

Price Call: HOLD

Target Price: 5.50

Close to sealing the deal?

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: AMMB

Price Call: TRADING BUY

Target Price: 5.60

DRB-Hicom may be Proton's best suitor: OSK

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: OSK

Price Call: BUY

Target Price: 5.87

DRB-Hicom Bhd may just be the best bidder for Khazanah's 42.7 per cent stake in Proton Holdings, said OSK Research.

In a research note today, OSK said DRB-Hicom may just be the best suitor out there despite bids by Proton chairman Datuk Nadzmi Mohd Salleh and Tan Sri Arumugam Apavoo Packiri and Gerald Lopez of Genii Capital, a private equity firm with a stake in the Lotus Renault GP Formula One Team.

"We opine that the attempts from Nadzmi and other joint bidders do not represent enough value to ensure Proton's turnaround.

"We still reiterate that DRB is currently Proton's best suitor given its tie-up with Volkswagen, which intends to set up a large Asean production hub in Malaysia," it added.

The research house said funding will not be an issues for DRB-Hicom as the group's net gearing ex-bank related assets and liabilities stand at only 17 per cent, as indicated by its last quarterly results.

"This can be easily stretched to 50-70 per cent to acquire Proton and possibly even higher, given Proton's onerous capital expenditure needs and its planned research and development activities and expansion," said OSK.

OSK said DRB-Hicom recently announced that it is raising RM500 million from the sukuk market for working capital and other potential acquisitions and expansion.

"It has an option to maximise this sukuk issue to the tune of RM1.8 billion," it added.

Meanwhile, it was reported in The Edge weekly that Arumugam and Lopez are mulling a joint bid for Khazanah's stake, reportedly for RM6 a share.

"We don't see any value proposition in turning around Proton on the table should these joint bidders acquire Proton, pointing out none of these two joint bidders have a stake or whatsoever relevant experience in the automotive sector," said OSK.

The research house maintains a "buy" call on Proton's shares at an unchanged fair value of RM5.87 premised on a 10 per cent premium to its adjusted Net Tangible Asset per share of RM5.34.

"This includes a revaluation surplus of RM147.6 million on the group's land bank and after stripping off all intangibles and inventories, as well as the estimated equity value of loss-making Lotus," it added. -- Bernama

DRB-VW reconsidering capex?

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: AMMB

Price Call: BUY

Target Price: 5.60

Lotus Attracts Chinese Suitor

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: OSK

Price Call: TRADING BUY

Target Price: 5.00

RHB Research ups Proton to trading buy, RM2.90

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: RHB

Price Call: TRADING BUY

Target Price: 2.90

KUALA LUMPUR (Dec 5): RHB Research Institute has raised its outlook on PROTON HOLDINGS BHD [] to a trading buy and valued it as RM2.90.

It said on Monday at RM2.90, this would mean a 25% discount to its five-year average price-to-book (P/B) of 0.39 times applied to CY12 book value per share.

'The potential value of Proton would obviously depend on any M&A outcome. However, factoring in a speculative premium by valuing the stock at 0.5 times P/B (30% premium to 0.39 times) suggests a potential value of RM5.00 that also implies a price to net tangible asset of 0.66 times.

'The sale of Lotus could enhance valuations by RM2.36 a share over our base case valuation of RM2.90 and could lift the fair value to RM5.26 a share,' it said.

Proton Holdings (Sell): Medium-term outlook remains cloudy

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: MAYBANK

Price Call: SELL

Target Price: 2.64

Catalysts lacking; maintain Sell. While results improved QoQ and its share price has appreciated 15% MoM on a rumoured management buy-out, Proton's 'big picture' remains cloudy. Lotus' turnaround will take until 2014 to realize, during which time, its losses will offset positive contributions from Proton's domestic operations and drain cashflow. For this, we see better values from its peers in the short-to mid-term. Our RM2.64 target price is based on 0.3x FY12 P/B.

Maybank research (30 November 2011)

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RHB Research maintains market perform on Proton, FV RM2.90

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD

Research House: RHB

Price Call: HOLD

Target Price: 2.90

KUALA LUMPUR (Nov 30): RHB Research Institute is maintaining its Market Perform recommendation on PROTON HOLDINGS BHD [] and a fair value of RM2.90 that is derived from applying a 25% discount to its five-year average price-to-book of 0.39 times, applied to CY12 book value per share (BVPS).

It said on Wednesday that while the operational outlook for Proton remains challenging, much of the recent interest in the stock has likely been driven by speculation involving possible M&A activity, involving the disposal of all or part of Khazanah Nasional's 42.7% block.

RHB Research said the recent speculation has involved an MBO, while rumoured potential suitors include the Naza group, DRB-HICOM and Sime Darby, as well as the sale of all or part of Lotus Group.

'With Khazanah's high average holding cost and Proton's latest BVPS and NTAPS (net tangible asset per share) at RM9.81 and RM7.62 respectively, that is a substantial premium to the market price, we believe the main stumbling block to any potential deal is likely to be pricing,' it said.