Friday, December 2, 2011

Proton up amid cautious market on takeover rumours

KUALA LUMPUR (Dec 2): Shares of PROTON HOLDINGS BHD [] advanced amid a cautious market on Friday as speculation of its takeover lured traders, especially after Daihatsu Motor Co Ltd of Japan reiterated its rejection of a Proton-Perodua merger.

At 3.05pm, Proton was up 34 sen to RM3.44 with 7.63 million shares done.

The FBM KLCI was fluctuating in the positive and negative zones after the early spurt. The 30-stock index was just 0.01 of a point up at 1,485.27. Turnover was 960 million shares valued at RM700.96 million. There were 256 gainers, 372 losers and 287 stocks unchanged.

Meanwhile, The Edge Financial Daily reported on that Daihatsu, a key shareholder of Perodua, was standing firm against the idea of a merger between Perodua and Proton.

Daihatsu president Koichi Ina was quoted saying both companies have very different cultures and product lines and it's better to keep the individuality.

On Nov 29, UOB Kay Hian Research Malaysia upgrade Proton to a Hold from Sell previously raised its target price to RM3.05, after imputing a 15% discount (vs 30% previously) to RNAV.

'Should Proton be able to dispose the loss-making Lotus Group, every RM100 million raised from this potential disposal could add 20 sen/share to Proton's RNAV,' it said.

The research house said there was some truth to the constant speculation of Proton's impending takeover, after seeing Proton's somewhat bullish share price action (uptrend but with high volatility) over the past two weeks, recent consolidation in the auto industry (MBM Resources buying Hirotako), ongoing reforms by ailing GLCs (eg Malaysia International Shipping Corporation (MISC) has just announced its decision to cease its liner operations, once thought to be a 'sacred cow').

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