DRB-Hicom to unveil new family car in two years

Business & Markets 2013
Written by AmResearch
Friday, 13 December 2013 10:15
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DRB-Hicom Bhd
(Dec 12, RM2.82)
Maintain buy at RM2.82 with a fair value of RM3.65: On Dec 11,
DRB-Hicom launched the new Proton Perdana model which will serve as the
official government car. There are two variants, the Perdana 2.0L and 2.4L.
Its wholly-owned subsidiary, Proton Holdings Bhd, has already delivered the
first batch of 200 units to the government.
The new Perdana, a product of DRB-Hicom’s collaboration with Honda, is built
on the Honda Accord platform.
As we had reported earlier, a total of 3,000 units will be delivered over a
two-year period to replace the government’s existing fleet. DRB-Hicom says
Proton has also received requests for the new model from state governments
and statutory bodies.
The new Perdana model forms the first phase of Proton’s plan to develop a new D-segment (large family) car. The D-segment model,
under the platform-sharing initiative with Honda, will be unveiled in 18 to 24 months’ time, with a completely new interior design and
changes to the exterior.
It is part of Proton’s five-year business plan under which it targets to sell 500,000 cars per annum, including 150,000 units for export, by
2017/18, with pre-tax earnings potentially at about RM1 billion. Proton is also slated to produce a “global small car” by next year. We
understand that it will produce about 60,000 units of this car per annum initially.
DRB-Hicom has seen investor interest following the unveiling of Proton’s business plan, its recent inclusion as a syariah-compliant stock
and the impending introduction of mandatory inspection of passenger vehicles.
Although the mandatory inspection may be opened to other players, DRB-Hicom’s wholly-owned subsidiary Puspakom Sdn Bhd is still
expected to benefit from the move. Up to Aug 31, 2014 Puspakom has the sole concession to undertake computerised inspections for all
commercial vehicles.
Puspakom performs more than three million inspections for nearly 1.5 million customers annually. It has over 70 branches (complemented
by two mobile units), which have a combined capacity to inspect about five million vehicles annually.
Puspakom recorded a 5.6% rise in revenue to RM141.1 million in financial year 2013 ended March 31 (FY13) from RM133.6 million in
FY12.
As value begins to emerge, we maintain “buy” on DRB-Hicom, with an unchanged fair value of RM3.65 per share — a 15% discount to our
sum-of-parts value of RM4.31 per share. — AmResearch, Dec 12

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