DRB-Hicom unit to benefit from voluntary vehicle inspection policy, says PublicInvest Research

by **Cals** Tue 21 Jan 2014, 10:41

Business & Markets 2014

Written by theedgemalaysia.com

Tuesday, 21 January 2014 09:52

KUALA LUMPUR (Jan 21): PublicInvest Research has maintained its Outperform rating on DRB-Hicom Bhd at RM2.77 with a target price of RM3.53 and saidDRB-Hicom’s unit, Puspakom, is expected to the key beneficiary with a network of inspection centres and necessary expertise.
In a note Tuesday, the research house said the government announced the long-awaited 2014 National Automotive Policy (NAP) yesterday with most key aspects such as energy efficient vehicle (EEV) policies and gradual car prices reduction by 20-30% by 2017 which were within market expectations.
PublicInvest said it was neutral on the impact of 2014 NAP on DRB-Hicom as the group would benefit from voluntary vehicle inspection policy and incentives & potential collaboration for EEVs production but Proton may face more competition in the smaller car segment with new licences for foreign manufacturers to produce EEVs with engines of less than 1.8 litres.
“We maintain our Outperform call on DRB-Hicom (DRB) with an unchanged 12-month target price of RM3.53
“Although the voluntary vehicle inspection policy will not be limited to just one agency or company, DRB-Hicom’s unit, Puspakom, is expected to the key beneficiary with a network of inspection centres and necessary expertise.
“The 2009 NAP specified the termination of open AP by Dec 31, 2015 and franchise AP by Dec 31, 2020 and will remain status quo until an in-depth study on the impact of termination of APs on Bumiputera participation in the car industry,” it said.