Tuesday, September 6, 2011

Proton slumps to 2-yr low

KUALA LUMPUR: Shares of PROTON HOLDINGS BHD [] fell to a more than two year low at the midday break on Tuesday, Sept 6 following the disappointing results and aggravated by the selldown of Malaysian equities by foreign funds.

At 12.30pm, Proton was down 16 sen to RM2.75 with 121,500 shares done. The current price was sharply lower compared to CIMB Equities Research's target price of RM3.25

The FBM KLCI fell 7.34 points to 1,455.78. Turnover was 314.54 million shares done valued at RM543.83 million. There were 441 gainers, 138 losers and 220 stocks unchanged.

On Aug 26, Proton announced its 1Q net profit for the period ended June 30 plunged 94.6% to RM4.55 million from RM84.68 million a year ago largely due to the higher expenses incurred by Lotus Group International Bhd. 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.

CIMB Research said Proton's results were a huge disappointment as core net profit accounted for only 3% of its and consensus full-year forecast.

The research house had also slashed its FY12-14 earnings by 35%-60% to reflect higher losses from Lotus. It had also widen the discount it tagged to Proton's historical price-to-net tangible asset 0.5 times from 10% to 20% to reflect the heightened risk that Lotus's turnaround exercise poses to Proton's earnings.

'This pushes down our target price from RM3.65 to RM3.25. We downgrade Proton from Neutral to UNDERPERFORM as this result could trigger a de-rating,' it had said.

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