Wednesday, August 3, 2011

Air bags ruling lifts Hirotako share price

KUALA LUMPUR: Shares of HIROTAKO HOLDINGS BHD [] advanced in active trade in late afternoon trade on Wednesday, Aug 3 as it would benefit from the airbags ruling.

At 4.10pm, it was up three sen to 87 sen. There were 2.72 million shares done at prices ranging from 83.5 sen to 87 sen.

UOB Kay Hian Malaysia Research said a new regulation requiring almost all vehicles to be fitted with two frontal airbags by Jan 12, 2012 benefits airbag maker Hirotako.

The research house said this scenario analysis indicated a 5%-10% upside on Hirotako's 2012F net profit, assuming its net profit 2011F is unchanged from 2010.

UOB Kay Hian Research said the shares were currently trading at 9x 2012F PE (based on its scenario) vs 4.0 times to 7.0 times for other automobile vendors.

'With strong credentials, Hirotako dominates the Malaysian airbag market with 90% market share via its 51% subsidiary, Autoliv Hirotako. Autoliv Inc owns the remaining 49%. We understand that Hiro also dominates the seatbelt market, with about two-thirds market share in Malaysia,' it said.

The research house said Hirotako manufactures safety restraint systems, which makes up 92% of total 2010 sales.

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