Analysts believe more details might be revealed on the deal between Proton and Honda, along with its ongoing diversification trail.
Updates would be lead by managing director Datuk Seri Mohd Khamil Jamil, along with his lieutenants, COO Datuk Seri Che Khalib, Proton deputy CEO Datuk Lukman Ibrahim and DRB-Hicom automotive and defence group director Datuk Abdull Harith Abdullah.
The group has to rationalise its assets and digest the whopping RM3.02bil takeover of Proton in a bid to be a conglomerate focused on the automotive industry.
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| Khamil giving a thumbs-up but DRB-Hicom’s plans may not be that smooth sailing as it has big debts to repay. |
In a recent report, CIMB Research analyst Lucious Chong said its rationalisation programme was already under way, with current divestments to raise RM400.8mil in cash.
Besides the sale of Hicom Power for RM575mil cash to be completed over the next six months, two more likely non-core divestment candidates are its insurance arm UniAsia, and the paring down of its Bank Muamalat stake from 70% to 40% as per Bank Negara's regulations.
DRB-Hicom would also be launching the Lotus flagship centre in Klang Valley on Tuesday, cementing its position that Proton's British-based sportscar maker is not for sale despite the losses that are dragging down DRB profits.
Besides that, the group is expected to unveil its grand plans for Proton, but high expectations had disappointed analysts previously where nothing new was revealed save for the news that a new “global small car” to be introduced in 2013.
“The more interesting aspect of Proton would be the collaboration with Honda, but details are still scant. The E01 Petronas engines that were acquired gave the national carmaker a new powertrain system overnight. The turbo-charged engines would kick off development for its long-awaited Perdana replacement,” said an analyst.
He said Proton was well poised to become an Asean brand since there were no regional carmakers around, but it depended on how Proton moved forward with the Asean Economic Community with other automotive manufacturers based in the region well poised to benefit from it as well.
This year would also be a momentous year for its defence arm as well, where the RM7.4bil contract to build 257 eight-wheeled armoured vehicles will be recognised at the end of financial year 2013, and will peak in 2016 and 2017.
“This is in line with our current assumptions where we assume a 20% margin and the contract is an added kicker to our numbers, contributing to our 52% earnings per share forecast for financial year 2014 and 34% for financial year 2015.
“KL Airport Services Sdn Bhd (KLAS), its airport services business, will venture into the logistics value chain and potentially work to develop Pos Malaysia's courier business. KLAS will also benefit from the opening of KLIA2 next year,” said Chong.
He said with the material restructuring of DRB-Hicom so far, the revamp of Proton would ultimately depend on securing a foreign partner, with the risk-reward profile of DRB-Hicom remaining attractive with the stock trading below book value.
According to Bloomberg data, eight out of nine research houses had a “outperform” or “buy” call on the conglomerate with target prices ranging from RM3.27 to RM3.80. The company closed on Friday at RM2.62.
