KUALA LUMPUR: AutoV Corp Bhd, a components manufacturer for the auto industry, believes the impending takeover of Proton Holdings Bhd by DRB-Hicom Bhd will open up new business opportunities for Proton’s present vendors.
AutoV manufactures components and parts that primarily cater for Proton, which accounts for around 70% of its revenue. The rest of the company’s revenue comes from supplying parts to Perodua, Honda, Toyota and other carmakers.
“We feel that the takeover will offer more business potential for us. Having said that, it would depend on the direction that DRB-Hicom takes on Proton,” AutoV chairman and CEO Bernard Kong told The Edge Financial Daily.
Kong reckoned that a possible drawback from the takeover may be the overlap of vendors supplying to Proton.
“DRB-Hicom has its own vendors, which may be capable of producing components that AutoV or any other vendors currently supply to Proton,” he said.
“But we believe we can work with DRB-Hicom (as a partner), instead of a competitor. If we can’t be a tier-one supplier, which supplies directly to the manufacturer, we can be a tier-two supplier and serve those in tier-one. We can complement and support each other,” said Kong.
He said this may be true in the case of Proreka (M) Sdn Bhd, a manufacturer of plastic parts acquired by AutoV last June for RM27.88 million. Proreka is currently a tier-one vendor and manufacturer of OEM (original equipment manufacturer) and ODM (original design manufacturer) automotive parts and components.
In an interview last August, Kong said the addition of Proreka may elevate AutoV’s role in supplying to Proton.
“Proton would prefer itself to be supported by bigger vendors that can cater for its large demand. We believe that with the acquisition of Proreka, we can achieve the necessary requirements needed to be bigger and better,” he said.
AutoV had stated that the acquisition of Proreka was “in line with its strategic plan to grow the group into a bigger and integrated producer of automotive parts with a more diversified range of products and clientele”.
Besides Proreka, AutoV last year also acquired JP Metal Sdn Bhd, a manufacturing and fabrication unit, from JoTech Holdings Bhd for RM7 million.
Though revenue in its most recent quarter improved, AutoV’s results for the nine months ended Aug 31, 2011 showed a year-on-year decline.
“Group revenue decreased by RM3 million or 3.7% to RM77.2 million from RM80.2 million in the preceding corresponding period. This was mainly due to the reduced production of certain car models during the period of declining sales,” AutoV said in a statement to Bursa Malaysia.
AutoV announced on Monday that Temasek Formation Bhd had received approval from the Securities Commission (SC) for the merger of AutoV, JoTech and AIC Corp Bhd.
The merged entity will be listed under Temasek Formation.
“Prior to the merger, AutoV has always been restricted by its small size. We had problems in the past with acquiring a certain company due to our smaller presence. With the merger, we plan to continue with our current strategy of acquiring companies that prove to be beneficial to us,” Kong told The Edge Financial Daily in an earlier interview.
“Upon the successful completion of the proposed merger, it will create a larger group in terms of market capitalisation. It will also streamline the multi-tiered shareholding structure and unlock potential intrinsic values of the target companies,” said Temasek Formation owner Datuk Goh Tian Chuan.
This article appeared in The Edge Financial Daily, February 2, 2012.
AutoV manufactures components and parts that primarily cater for Proton, which accounts for around 70% of its revenue. The rest of the company’s revenue comes from supplying parts to Perodua, Honda, Toyota and other carmakers.
“We feel that the takeover will offer more business potential for us. Having said that, it would depend on the direction that DRB-Hicom takes on Proton,” AutoV chairman and CEO Bernard Kong told The Edge Financial Daily.
Kong reckoned that a possible drawback from the takeover may be the overlap of vendors supplying to Proton.
“DRB-Hicom has its own vendors, which may be capable of producing components that AutoV or any other vendors currently supply to Proton,” he said.
“But we believe we can work with DRB-Hicom (as a partner), instead of a competitor. If we can’t be a tier-one supplier, which supplies directly to the manufacturer, we can be a tier-two supplier and serve those in tier-one. We can complement and support each other,” said Kong.
He said this may be true in the case of Proreka (M) Sdn Bhd, a manufacturer of plastic parts acquired by AutoV last June for RM27.88 million. Proreka is currently a tier-one vendor and manufacturer of OEM (original equipment manufacturer) and ODM (original design manufacturer) automotive parts and components.
In an interview last August, Kong said the addition of Proreka may elevate AutoV’s role in supplying to Proton.
“Proton would prefer itself to be supported by bigger vendors that can cater for its large demand. We believe that with the acquisition of Proreka, we can achieve the necessary requirements needed to be bigger and better,” he said.
AutoV had stated that the acquisition of Proreka was “in line with its strategic plan to grow the group into a bigger and integrated producer of automotive parts with a more diversified range of products and clientele”.
Besides Proreka, AutoV last year also acquired JP Metal Sdn Bhd, a manufacturing and fabrication unit, from JoTech Holdings Bhd for RM7 million.
Though revenue in its most recent quarter improved, AutoV’s results for the nine months ended Aug 31, 2011 showed a year-on-year decline.
“Group revenue decreased by RM3 million or 3.7% to RM77.2 million from RM80.2 million in the preceding corresponding period. This was mainly due to the reduced production of certain car models during the period of declining sales,” AutoV said in a statement to Bursa Malaysia.
AutoV announced on Monday that Temasek Formation Bhd had received approval from the Securities Commission (SC) for the merger of AutoV, JoTech and AIC Corp Bhd.
The merged entity will be listed under Temasek Formation.
“Prior to the merger, AutoV has always been restricted by its small size. We had problems in the past with acquiring a certain company due to our smaller presence. With the merger, we plan to continue with our current strategy of acquiring companies that prove to be beneficial to us,” Kong told The Edge Financial Daily in an earlier interview.
“Upon the successful completion of the proposed merger, it will create a larger group in terms of market capitalisation. It will also streamline the multi-tiered shareholding structure and unlock potential intrinsic values of the target companies,” said Temasek Formation owner Datuk Goh Tian Chuan.
This article appeared in The Edge Financial Daily, February 2, 2012.
