DRB-Hicom gears up for regional expansion (1619)

KUALA LUMPUR: DRB-Hicom Bhd is gearing up for regional expansion with Honda and Volkswagen as its springboard, says HWANGDBS Vickers Research Sdn Bhd.

In a research note today, HWANGDBS Vickers said Honda Japan's decision to make Malaysia its regional manufacturing hub for hybrids was timely, as it expects a slew of incentives for Energy Efficient Vehicles (EEV) in the National Automotive Policy.

Meanwhile, Volkswagen's capacity in Pekan (Pahang) would be progressively ramped up to 50,000 units between 2017 to 2018, paving the way for exports to the Asean market.

There would be three variants, namely, the Passat, Jetta and Polo, making Malaysia its regional hub for passenger vehicles.

On DRB-Hicom's defence business, DRB-Hicom Defence Technologies Sdn Bhd (Deftech) is set to release the first prototype of its 247 units of armoured vehicles next year, enabling strong earnings recognition from its RM7.55 billion contract from the 2014 financial year onwards.

The research house also viewed Deftech to be a potential catalyst to the group, if it leverages on its partnership with Sweden's SAAB AB, for a contract to supply an Airborne Early Warning and Control System to the Royal Malaysian Air Force.

HWANGDBS Vickers has maintained its "buy" call on DRB-Hicom with RM3.35 target price. -- BERNAMA