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Tuesday, 31 January 2012

DRB-HICOM in Volkswagen charm offensive

Business Times understands that the two met key stakeholders of DRB-HICOM, including its top management. "They also reviewed all Proton Holdings Bhd's models," said a source. It is understood that the Volkswagen directors were here to evaluate the possibility of having a collaborative technical agreement on technology transfer with Proton. "This is the first step and I think that there will be many more such meetings before a deal could be struck,"said the source. DRB-HICOM recently bought a 42.7 per cent stake in Proton for RM5.50 a share, valuing the national carmaker at RM3 billion. DRB-HICOM currently assembles VW cars at its manufacturing hub in Pekan, Pahang. Volkswagen, Europe's largest carmaker, eventually plans to use Pekan as its main hub to penetrate the Southeast Asian market. Meanwhile, CIMB said in a report that with the acquisition of Proton, it now valued DRBHICOM shares at RM4.60 each. "With Proton operating at a 50 per cent utilisation rate, DRB-HICOM has the option to allow its foreign partners to use its excess capacity," analyst Lucius Chong said in the report. Chong noted that he would not be surprised if DRB- HICOM were to hive off Lotus. Additionally, the purchase of Proton will also increase DRB-HICOM's revenue and net profit substantially. The CIMB report estimated that for the year ended March 31, 2013, DRB-HICOM was poised to register a revenue of RM18.75 billion and a net profit of RM685.5 million.

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