Proton Holdings Bhd (Dec 5, RM 4.50)
Maintain buy with revised fair value RM5 from RM2: The Edge weekly reported this week that Proton Holdings Bhd’s major shareholder Khazanah Nasional Bhd, which owns a 42% stake, is seeking a possible divestment of as much as 30% of its stake to interested parties.
It is understood that several local auto manufacturers have been approached. DRB-Hicom Bhd has expressed strong interest, as well as the management of Proton (through a management buyout). Sime Darby Bhd, UMW Group, Naza Group of Companies and Hyundai-Berjaya Corp Bhd were approached but were not interested.
Over the past few weeks, Proton’s share price has rallied strongly on massive volumes last seen in early 2007, when its potential acquisition by Volkswagen collapsed. The strong rally in its share price of late was fuelled by a rumour that DRB-Hicom, which has been courting Proton over the years, is keen to buy the 30% stake held by Khazanah at the price of RM8 per share, valued at 0.96 times price per net tangible assets (P/NTA). At such a price, this deal could be worth RM1.3 billion.
Given that Khazanah would want to keep the ownership of Proton in local hands, it makes perfect sense to think that DRB-Hicom would be the best candidate.
Proton’s Tanjung Malim plant, which is significantly underutilised, could be used as Volkswagen’s Asean manufacturing hub, noting that DRB-Hicom has plans to localise production of at least three Volkswagen product line-ups.
We also understand the localisation is being postponed to 2013 from end-2011 due to capacity constraints at its Pekan plant. The presence of Volkswagen in this picture will add value to Proton, as this will give Proton global market accessibility upon the exchange of a joint technology product development with Volkswagen.
We understand that in 2010 Volkswagen was interested in renegotiating with Proton a potential strategic partnership to localise production of Volkswagen cars but the deal eventually reached a stalemate, which led to Volkswagen partnering with DRB-Hicom instead. — OSK Research, Dec 5
This article appeared in The Edge Financial Daily, December 6, 2011.
Maintain buy with revised fair value RM5 from RM2: The Edge weekly reported this week that Proton Holdings Bhd’s major shareholder Khazanah Nasional Bhd, which owns a 42% stake, is seeking a possible divestment of as much as 30% of its stake to interested parties.
It is understood that several local auto manufacturers have been approached. DRB-Hicom Bhd has expressed strong interest, as well as the management of Proton (through a management buyout). Sime Darby Bhd, UMW Group, Naza Group of Companies and Hyundai-Berjaya Corp Bhd were approached but were not interested.
Over the past few weeks, Proton’s share price has rallied strongly on massive volumes last seen in early 2007, when its potential acquisition by Volkswagen collapsed. The strong rally in its share price of late was fuelled by a rumour that DRB-Hicom, which has been courting Proton over the years, is keen to buy the 30% stake held by Khazanah at the price of RM8 per share, valued at 0.96 times price per net tangible assets (P/NTA). At such a price, this deal could be worth RM1.3 billion.
Given that Khazanah would want to keep the ownership of Proton in local hands, it makes perfect sense to think that DRB-Hicom would be the best candidate.
Proton’s Tanjung Malim plant, which is significantly underutilised, could be used as Volkswagen’s Asean manufacturing hub, noting that DRB-Hicom has plans to localise production of at least three Volkswagen product line-ups.
We also understand the localisation is being postponed to 2013 from end-2011 due to capacity constraints at its Pekan plant. The presence of Volkswagen in this picture will add value to Proton, as this will give Proton global market accessibility upon the exchange of a joint technology product development with Volkswagen.
We understand that in 2010 Volkswagen was interested in renegotiating with Proton a potential strategic partnership to localise production of Volkswagen cars but the deal eventually reached a stalemate, which led to Volkswagen partnering with DRB-Hicom instead. — OSK Research, Dec 5
This article appeared in The Edge Financial Daily, December 6, 2011.
