DRB-Hicom Bhd is on its way to becoming the key regional automotive player with own Proton marque, as well as exporting Volkswagen vehicles to regional markets, says Hong Leong Investment Bank (HLIB).
It said over the longer term, DRB-Hicom could penetrate the regional market with the Proton marque, gaining international recognition.
DRB-Hicom has also expressed an interest in supporting the development of Proton’s hybrid and electric vehicle technology.
However, HLIB said it raises concerns over the DRB-Hicom's performance which will be weighed down by Proton's existing issues of restructuring the Lotus Group, plants underutilisation, incompetence in technology and lack of product offerings.
"We do not expect DRB-Hicom to sell off Lotus in the immediate term, mainly due to the collaboration between Lotus and Proton in developing Global Small Car - hybrid vehicles or better known as Proton Emas, which is expected to be introduced in 2012/13," it said.
HLIB believes that DRB-Hicom does not need to inject capital into Lotus in the near term. This because the Lotus Group has already secured a RM1.35 billion loan to fund the initial stage of its RM2.4 billion restructuring cost.
On the Proton post-mandatory general offering (MGO) exercise, HLIB also believes that DRB-Hicom does not need to inject capital into Proton, as its balance sheet looks healthy with a net gearing of 45.3 per cent.
Furthermore, Proton still has cash of RM1.3 billion (net cash of RM355 million), indicating a sufficient enough cash level to fund its capital expenditure for the next 2-3 years, it added. DRB-Hicom shares were down five sen to RM2.12 as at 11.45 am today. -- BERNAMA
It said over the longer term, DRB-Hicom could penetrate the regional market with the Proton marque, gaining international recognition.
DRB-Hicom has also expressed an interest in supporting the development of Proton’s hybrid and electric vehicle technology.
However, HLIB said it raises concerns over the DRB-Hicom's performance which will be weighed down by Proton's existing issues of restructuring the Lotus Group, plants underutilisation, incompetence in technology and lack of product offerings.
"We do not expect DRB-Hicom to sell off Lotus in the immediate term, mainly due to the collaboration between Lotus and Proton in developing Global Small Car - hybrid vehicles or better known as Proton Emas, which is expected to be introduced in 2012/13," it said.
HLIB believes that DRB-Hicom does not need to inject capital into Lotus in the near term. This because the Lotus Group has already secured a RM1.35 billion loan to fund the initial stage of its RM2.4 billion restructuring cost.
On the Proton post-mandatory general offering (MGO) exercise, HLIB also believes that DRB-Hicom does not need to inject capital into Proton, as its balance sheet looks healthy with a net gearing of 45.3 per cent.
Furthermore, Proton still has cash of RM1.3 billion (net cash of RM355 million), indicating a sufficient enough cash level to fund its capital expenditure for the next 2-3 years, it added. DRB-Hicom shares were down five sen to RM2.12 as at 11.45 am today. -- BERNAMA
