Tuesday, September 27, 2011

Proton dips on Lotus outlook

KUALA LUMPUR: PROTON HOLDINGS BHD [] shares dipped at mid-morning on Tuesday, Sept 27 on concerns its sports carmaker-unit Lotus would remain loss-making in the next four years.

At 10.55am, Proton shed 5 sen to RM2.58 with 9,300 shares traded.

Last Friday, Proton had told analysts that Lotus was on track to turn around as the actual result on volume sold has exceeded the management's target.

However, Affin Investment Bank in a research note on Sept 26 said it expects Lotus to be a drag on the near-term domestic earnings trajectory, adding that implicit in its 'depressed' earnings was a RM250 million EBIT loss for Lotus.

On the fact that Lotus will be loss-making for few more years, Affin said it wa not upbeat about Proton's earnings prospects at least in the next one or two years.

According to Affin Investment Bank, Lotus CEO Danny Bahar confirmed that Lotus' restructuring plan 'is well within the guided timeframe'.

'Lotus is expected to be loss-making over the next four years as the management is in the midst of restructuring and developing new products before turning in profit in 2015,' it said.

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