In a note, the research firm said the potential launch of a new sports utility vehicle (SUV) and all-electric vehicles (Smart) models next year, as well as higher contributions from export markets, would also drive Proton’s positive growth momentum.
Proton’s parent company DRB-Hicom Bhd returned to the black in the third quarter ended Sept 30 (Q3 2022), chalking up a net profit of RM143.95 million against a net loss of RM179.44 million in Q3 2021, mainly attributed to the higher sales from Proton.
“The automotive segment remains the key driver for the group, on the back of 55% year-on-year (y-o-y) revenue growth in the first nine months ended Sept 30, driven by higher contribution from Proton.
Proton’s sales volume jumped 40% y-o-y due to base effects (negative impact of the Covid-19 lockdowns in June-August 2021 on sales) and the extension of the grace period to March 31, 2023, to register cars booked before June 30, 2022 (the cut-off date for the sales and services tax holiday), said CGS-CIMB.
Proton’s total sales for nine months in FY22 exceeded 100,000 units, at 102,353 units, compared with 73,107 units in the corresponding period.
In a filing with Bursa, DRB-Hicom said the total industry volume (TIV) of the automotive industry remains on track to achieve the forecast of 630,000 units this year.
CGS-CIMB has raised its forecast earnings per share on DRB Hicom for financial years 2022-2024 (FY22-24) by 64%-127% to account for higher contributions from the company’s auto and banking segments.
“We like DRB-Hicom as a proxy for Proton’s resurgence and the overnight policy rate hike theme.
“Hence, we upgrade the stock to an ‘add’ call from ‘hold’, with a higher target price of RM1.75,” it said.
DRB-Hicom is the majority shareholder of the national car company Proton, with China’s Zhejiang Geely Holding Group the other shareholder since an equity sale in 2017.
The group also owns national motorcycle company Modenas, with Japanese two-wheeler giant Kawasaki as its partner. DRB-Hicom also assembles cars in Malaysia for Tata Motors, Honda, Isuzu, Mercedes-Benz and Volkswagen.