Monday, December 5, 2011

RHB Research ups Proton to trading buy, RM2.90

KUALA LUMPUR (Dec 5): RHB Research Institute has raised its outlook on PROTON HOLDINGS BHD [] to a trading buy and valued it as RM2.90.

It said on Monday at RM2.90, this would mean a 25% discount to its five-year average price-to-book (P/B) of 0.39 times applied to CY12 book value per share.

'The potential value of Proton would obviously depend on any M&A outcome. However, factoring in a speculative premium by valuing the stock at 0.5 times P/B (30% premium to 0.39 times) suggests a potential value of RM5.00 that also implies a price to net tangible asset of 0.66 times.

'The sale of Lotus could enhance valuations by RM2.36 a share over our base case valuation of RM2.90 and could lift the fair value to RM5.26 a share,' it said.

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