Tuesday, October 11, 2011

Proton edges up at mid-morning

KUALA LUMPUR: PROTON HOLDINGS BHD [] shares edged up at mid-morning on Tuesday, Oct 11 after RHB Research upgraded the stock to Market Perform and raised its fair value to RM2.90.

At 10.30am, Proton added three sen to RM2.69 with 124,900 shares traded.

RHB Research in a note Oct 11 said that according to Autosport UK, speculation was circulating during last weekend's Japanese Grand Prix, that Genii Capital could be buying a stake in Group Lotus.

It said the report cited 'high level sources' that Genii Capital has held advanced talks with Group Lotus' owners about taking a management and financial interest in the company that could even go as far as a majority shareholding.

'We see the odds of an outright sale of a majority stake in Lotus by Proton as low at this juncture, given the time and money already invested as well as political implications for the company and the Government.

'However, the sale of a minority stake in Group Lotus could have long-term strategic benefits in addition to helping Proton mitigate financial risks from Lotus' ongoing financial and operational turnaround,' it said.

The research house raised its fair value to RM2.90 (from RM2.50) based on a reduced 25% discount to its five-year average P/B of 0.39x (from 35% discount), applied to CY12 BVPS.


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