DRB-Hicom shares rise on news of Proton sale


KUALA LUMPUR: CIMB Equities Research is retaining its earnings forecast for DRB-Hicom and target price of RM1.60.

DRB-Hicom Bhd shares jumped as high as RM1.24 or 11.7 per cent Monday afternoon.

At 12:02pm, DRB-Hicom was up by 11 sen or 9.91 per cent to RM1.22 with 11 million shares traded. Its intraday high was also the highest since Jan 4, according to theedgemarkets.com.

The Edge weekly had reported that DRB-Hicom was expecting up to seven bids to purchase part or all of Proton Holdings Bhd.

It said most of the bids had already been received with one or two more due before the mid-August deadline.

Among the suitors bandied about by sources were Volkswagen AG and General Motors Co, and one Chinese automaker – believed to be Geely Automobile Holdings Ltd – it reported.

DRB-Hicom, which owns the loss-making Proton, has had high target prices relative to its last traded price, which averaged at RM1.19. They ranged from a low of 76 sen to RM1.60.

Media reports said DRB-Hicom had advised key stakeholders of the possibility that Proton might be wholly disposed of and that the whole process was expected to be completed by the first quarter of next year.

The sources added that DRB-Hicom made it clear that it was willing to sell up to 100 per cent of Proton.

“We believe that, this time around, there is a higher chance that the sale of Proton to a foreign partner may succeed given the recent reorganisation in Proton’s top level management and its need for further equity injection,” said CIMB analyst Mohd Shanaz Noor Azam in a note Monday.

Mohd Shanaz said Suzuki Motor Corp could be a frontrunner, given its signing of a memorandum of understanding with Proton in June last year.

“DRB-Hicom’s sale does not mean that Proton will be controlled by foreigners. The government has the option to take up a 79.28 per cent stake in Proton if it opts to convert its redeemable convertible cumulative preference shares (RCCPS) that were issued as part of a RM1.25 billion loan,” he was quoted as saying.

The Edge weekly said any decision would have to be presented to the special task force led by Idris Jala, chief executive officer of the Performance Management and Delivery Unit (Pemandu), which is monitoring Proton’s turnaround.