Monday, August 29, 2011

Proton dips on dismal 1Q earnings

KUALA LUMPUR: PROTON HOLDINGS BHD [] shares declined on Monday, Aug 29 after its net profit fell sharply by 94.6% to RM4.55 million in the first quarter ended June 30, 2011 from RM84.68 million a year ago largely due to the higher expenses incurred by Lotus Group International Bhd.

At 9.10am, Proton fell nine sen to RM2.19.

It said on Friday, Aug 26 that revenue fell 2.9% to RM2.23 billion from RM2.29 billion while earning per share were 0.8 sen compared with 15.4 sen.

Proton said its operating expenses were RM2.29 billion, higher than its revenue of RM2.23 billion in the first quarter. A year ago, its operating expenses were RM2.22 billion.

Maybank IB Research in a note Aug 29 said Proton's 1QFY12 earnings only made up 4% of its ''initial full-year forecast and 2% of consensus, as the Lotus project drained earnings and cash.

'We have cut FY12-13 forecasts by 90% as we reckon reviving Lotus will gravely hurt its earnings and balance sheet over the next few years.

'As such we have downgraded Proton to a Sell and cut our target price to RM2.64 (-22%) as we lower our target P/B to 0.3x, from 0.5x previously,' it said.

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