KUALA LUMPUR: HLG Research said PROTON HOLDINGS BHD []'s share price has been steadily picking up to as high as RM5.03 from a three-month low of RM4.35.
In a research note issued on Wednesday, Sept 29, it said the national car maker's share price gained seven sen to RM4.87 after the 20 sen final dividend went ex on Tuesday.
On the share price performance, it said the factors were:
(1) A strong 56% jump in its 1QFY11 earnings and aniticipating an equally good 2Q results ;
(2) Speculation of'' a consolidation in the auto industry has re-emerged;
(3) Ongoing speculation that Lotus might be sold to third parties, underscoring the company's inherent values;
(4) Strong domestic auto sales outlook;
(5) The replacement Waja as a potential catalyst for Proton, similar to the Exora which was released last year;
(6) Talks of strategic partners still ongoing after the VW deal fell through; and
(7) The completion of feasibility study on plant consolidation by year-end, as moving its production from Shah Alam to Tanjung Malim should also help trim costs, enhance operational efficiency and enable Proton to unlock the value of its 143-acre land in Shah Alam.
'At RM4.87, Proton is trading at 8.3x FY11 P/E (industry 9.2x) and 0.5x FY11 P/B (industry 1.3x). We expect the 9.8% P/E and 51% P/B discounts to the industry to narrow, underpinned by its improving fundamentals and strong net cash/share of RM2.64.
'Our 6-month technical target price for Proton is RM6, implying a 0.59x FY11 P/B, which is 15% discount to its 10-year average P/B of 0.7x,' it said.
In a research note issued on Wednesday, Sept 29, it said the national car maker's share price gained seven sen to RM4.87 after the 20 sen final dividend went ex on Tuesday.
On the share price performance, it said the factors were:
(1) A strong 56% jump in its 1QFY11 earnings and aniticipating an equally good 2Q results ;
(2) Speculation of'' a consolidation in the auto industry has re-emerged;
(3) Ongoing speculation that Lotus might be sold to third parties, underscoring the company's inherent values;
(4) Strong domestic auto sales outlook;
(5) The replacement Waja as a potential catalyst for Proton, similar to the Exora which was released last year;
(6) Talks of strategic partners still ongoing after the VW deal fell through; and
(7) The completion of feasibility study on plant consolidation by year-end, as moving its production from Shah Alam to Tanjung Malim should also help trim costs, enhance operational efficiency and enable Proton to unlock the value of its 143-acre land in Shah Alam.
'At RM4.87, Proton is trading at 8.3x FY11 P/E (industry 9.2x) and 0.5x FY11 P/B (industry 1.3x). We expect the 9.8% P/E and 51% P/B discounts to the industry to narrow, underpinned by its improving fundamentals and strong net cash/share of RM2.64.
'Our 6-month technical target price for Proton is RM6, implying a 0.59x FY11 P/B, which is 15% discount to its 10-year average P/B of 0.7x,' it said.
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