Proton’s shares rally on takeover talks again, DRB-Hicom up

KUALA LUMPUR (Dec 12): PROTON HOLDINGS BHD []’s shares and call warrants rallied on Monday as market talk that Khazanah Nasional would sell its stake to DRB-HICOM BHD [] went into overdrive.

At 3.28pm, Proton was up 31 sen to RM4.30 with 13.15 million shares
done. Its call warrants Proton-CG added 7.5 sen to 38.5 sen and
Proton-CI added 12 sen to 45 sen.

DRB-Hicom rose one sen to RM2.13. There were 3.59 million shares traded at prices ranging from RM2.13 to RM2.19.

The FBM KLCI was up 7.79 points to 1,467.92. Turnover was 1.15
billion shares valued at RM685.36 million. There were 342 gainers versus
311 losers while 304 stocks were unchanged.

Tun Dr Mahathir Mohamad, Proton’s adviser, said Khazanah was selling
its stake to DRB-Hicom. He was quoted saying on Sunday that Khazanah was
selling its stake because it was not pumping more money into Proton,
which needed funds for research and development work on new products
such as hybrid cars.

“I worry about the buyer (DRB-Hicom) having enough money to inject
into Proton. The shares it will be buying are above market price, which
will make profitability difficult,” Dr Mahathir said. “But I believe in
DRB-HICOM's capabilities,” he said, adding that the status of Proton as a
national car would remain after the sale

The Edge weekly reported that the Shanghai Automotive
Industry Corp (SAIC) has expressed strong interest in owning a stake in
Lotus, following its recent visit to the Lotus manufacturing plant in
England.

OSK Research said given the encouraging market potential for Lotus in
China and the dire need for funds by Proton in view of its burgeoning
capex allocation; “we think the entry of SAIC in the form of equity
injection would be meaningful”.

The research house said SAIC was both the JV partner of Volkswagen
and GM, which we think would spur more interest from DRB being Proton's
suitor.

“We maintain our Trading Buy with our fair value unchanged at RM5,” OSK Research said.