CIMB Research has technical buy on Proton at RM3.61

KUALA LUMPUR (Dec 5): CIMB Equities Research has a technical buy on Proton Holdings at RM3.61 at which it is trading at a FY13 price-to-earnings of 16.4 times and price-to-book value of 0.4 times.

The research house said on Monday Proton broke out of its triangle resistance on Friday.

'The rally also lifted prices above its 200-day SMA. Looking at the chart, we think this uptrend still has legs. The next upswing is likely to push prices towards RM3.86 and RM4.00 next,' it said.

CIMB Research said the technical landscape remains compelling. MACD is hovering in the positive territory while RSI is also above the 50pts mark.

'Risk takers may take some position here. However, always put a stop at between RM3.36-RM3.23 in case this is a bull's trap,' it said.

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').

DRB Hicom to bank on M&A to drive future growth

SHAH ALAM: DRB-HICOM BHD [] will bank on selective mergers and acquisitions to fuel future growth, as organic growth was deemed to be too slow to realise its vision to become the top conglomerate in the country, said its group managing director Datuk Seri Mohamad Khamil Jamil.

However, he said any acquisition exercise that the group wanted to embark on should add value and be synergistic to its business model.

"When we acquired Pos Malaysia, many people said that the snail mail industry was a sunset industry. However, I look at the business opportunity that it presents to the group, with the network and areas that it reaches to," he said after its annual general meeting on Thursday, Sept 8.

Khamil said it would be synergistic to acquire PROTON HOLDINGS BHD [], as currently around 50% of DRB-Hicom's automotive sector revenue, which accounted for almost 60% of the group's revenue derived from the national car maker.

However, he said that after acquiring Pos Malaysia, the group wanted to first focus on realising the potential synergy in the group's operation by building a good business model to expand its operating profit.

He said DRB-Hicom plans to raise as much as RM1.7 billion in the next five years as the group embark onto the second phase of its five year growth plan which started in 2006.

The fund would be used to finance capital expenses such as to expand its automobile assembly plant in Pekan for the Volkswagen Passat assembly, a flagship campus of the international college of automotive manufacturing (ICAM) and to part fund the acquisitions of POS MALAYSIA BHD [], he said.

Proton open to strategic partnership, says MD

SHAH ALAM: PROTON HOLDINGS BHD [] is open to any form of strategic partnership for the benefit of Malaysian automotive industry, said group managing director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir.

"What is important, is not for Proton but for the industry, which is very strategic and considered one of the most important components in the manufacturing sector.

"We are already cooperating in our operations like vendor development and joint-sourcing of raw materials. But to undertake something like Malaysia Airline, it is really up to the government," he told reporters here on Friday, Aug 12 when asked if Proton and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) were looking to collaborate.

On Tuesday, AirAsia and MAS announced they had entered into a comprehensive collaboration framework, which included a major share swap and a collaboration agreement, to explore opportunities to cooperate on a broad range of areas.

Meanwhile, Syed Zainal Abidin, who earlier launched Proton's 1Malaysia Security Campaign, said the company expected the better sales momentum, seen in the first half of the year, to continue into the second half, driven by growing customer confidence and demand.

Proton sold 74,519 units in the first half and regained its position as the country's top-selling car manufacturer rivalling Perodua's sale of 62,584 units.

He said the national car manufacturer, which sold 157,274 vehicles last year, remained on track to clinch higher sales of between four and five per cent this year despite the amendment to the Hire Purchase Act 1967 which earlier slowed down sales.

Asked whether the company could overtake Perodua in total sales in the second half, he said: "To be number one is not our objective. Our priority is to introduce the best models in the market and provide good service." - Bernama

Maybank Research Neutral on auto stocks

KUALA LUMPUR: Maybank Investment Bank Research (Maybank IB) said the March 2011 auto sales were abnormally strong, which it viewed as a one-off event.

'Looking ahead, Malaysia's car production is expected to soften in the months ahead, affected by the supply chain disruption in Japan. The auto sector remains a Neutral,' it said on Wednesday, April 20.

Maybank IB Research said the longer-term operating landscape lacks catalyst and remains close ended, deterring foreign automakers from making Malaysia a regional hub.

'Stock-wise, share price is expected to trade sideways. MBM and Tan Chong remains a Buy while Proton and UMW are Holds,' it said.

It said that March total industry volume'' (TIV) jumped an unprecedented 57% on-month to 63,265 units. The strong sales were atypical; the Malaysia Automotive Association (MAA) concurred with this view.

'We opine the unusually strong buying pattern was driven largely by prospective customers front-loading their purchases ahead of the supply chain disruption affecting the auto industry. March 2011 auto sales are arguably the highest, surpassing the previous record of 56,139 units in March 2010. YTD, new registrations grew 7% YoY to 147,415 units,' it said.