KUALA LUMPUR (Jan 17): RHB Research Institute reiterates its Market Perform call on DRB-Hicom but lift sum-of-parts derived fair value to RM2.20 from RM1.90 after applying a lower 30% (from 40%) holding company discount.
It said on Tuesday that DRB-Hicom proposed to acquire Khazanah Nasional’s 42.7% stake in PROTON HOLDINGS BHD [] for RM5.50 cash totalling RM1.29 billion involving a mandatory general offer (MGO) for the remaining shares.
“At this juncture, it is still premature to speculate on DRB’s plans not only to ensure Proton’s survival, but also its revival. We note that there are areas where synergies can be extracted,” it said.
RHB Research said given that its current Proton forecasts do not yet factor in potential business synergies between Proton and DRB-Hicom in addition to future turnaround initiatives, the consolidation of Proton is EPS dilutive to DRB-Hicom.
“We also do not rule out a cash call or other fund raising initiative with financing costs running at RM240 million per annum.
“We reiterate our Market Perform call on DRB but lift sum-of-parts derived fair value to RM2.20 (from RM1.90) after applying a lower 30% (from 40%) holding company discount,” it said.
It said on Tuesday that DRB-Hicom proposed to acquire Khazanah Nasional’s 42.7% stake in PROTON HOLDINGS BHD [] for RM5.50 cash totalling RM1.29 billion involving a mandatory general offer (MGO) for the remaining shares.
“At this juncture, it is still premature to speculate on DRB’s plans not only to ensure Proton’s survival, but also its revival. We note that there are areas where synergies can be extracted,” it said.
RHB Research said given that its current Proton forecasts do not yet factor in potential business synergies between Proton and DRB-Hicom in addition to future turnaround initiatives, the consolidation of Proton is EPS dilutive to DRB-Hicom.
“We also do not rule out a cash call or other fund raising initiative with financing costs running at RM240 million per annum.
“We reiterate our Market Perform call on DRB but lift sum-of-parts derived fair value to RM2.20 (from RM1.90) after applying a lower 30% (from 40%) holding company discount,” it said.
