DRB Hicom Yet To Endorse Anybody As Proton CEO, Says MD

DRB Hicom Bhd Group Managing Director Datuk Seri Mohd Khamil Jamil has quashed speculation that a new chief executive officer (CEO) has been endorsed to head Proton Holdings Bhd.

"I've got in my mind the formation of the new management (for Proton) but for the time being I can't revealed because I've got no access," he said.

Hence, Mohd Khamil said he was surprised when a certain name was highlighted through the media as the person to be appointed as CEO and had been endorsed by DRB Hicom.

"I'm not endorsing anybody as CEO yet," he told reporters at the signing of an international collaborative agreement between Liverpool John Moores University and International College of Automotive here today.

Last month, DRB Hicom announced a proposed acquisition of 42.74 per cent equity interest in Proton from Khazanah Nasional Bhd for RM1.3 billion cash and a mandatory general offer for the remaining Proton shares for RM5.50 a piece.
Mohd Khamil said he had yet to see Proton management officially to discuss the future of the national car manufacturer.

He said DRB Hicom would need to complete the acquisition process before going into the details in terms of its future direction.

Asked whether the shareholders would respond positively to the deal, Mohd Khamil said they have been accommodative.

"They've expressed their support to our decision to take over Proton and I hope they would also endorse and agree with our decision at the upcoming extraordinary general meeting," he said.

On whether DRB-Hicom would dispose Proton's loss-making unit, Lotus Group, he said, the company needs to have access and has to look at Lotus because it was one of Proton's important element.

"We've to make calculations and make an evaluated decision," he said, adding that he could not dispose Lotus Group without knowing the details of what Lotus was all about and how it could fit into DRB-Hicom's future plans.

On DRB-Hicom's plans for Proton's under-capacity Tanjung Malim plant, Mohd Khamil said there must be a rasionalisation instead of maximisation

.
"It's easy to maximise the capacity like how we did at our automotive plant in Pekan, Pahang.

"But as a car manufacturer, we must not only look into maximising capacity, but also look at production and manufacturing cars to fit proton's DNA," he added.

original post: Bernama Auto

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Proton Stake Sale To DRB-Hicom Is Practical: Frost & Sullivan

Khazanah Nasional Bhd's move to sell its stake in Proton Holdings Bhd to DRB-Hicom is a practical approach as the national auto maker will still remain Malaysian-owned yet can get access to global partners, says Frost & Sullivan.

In a statement, Partner & Head of the Automotive & Transportation Practice for Asia Pacific, Kavan Mukhtyar, said to be competitive, Proton needs economies of scale, high levels of capacity utilisation and access to technology and markets.

"DRB-Hicom can leverage its global distribution and assembling alliances to achieve this.

"It could potentially do contract assembling for other global partners in Malaysia and increase capacity utilisation of Proton's assembling units. This may open assembling opportunities not just in Malaysia but the regional markets.

"Proton may also potentially get access to other developing markets through the global partners," he said.

Mukhtyar said if Proton turns private, the automotive market will gain the most as it will be further liberalised in the medium term.

He said if managed correctly, the national auto maker could unlock its full potential in the regional automotive market.

"Liberalisation will also attract more interest in the Malaysian market from global automotive majors. This will enable Malaysia to attract further investments in the automotive sector.

"In the medium to longer term, vehicle prices in the mass market segment will go down. This will expand the market potential and eventually benefit the consumers," he said.

He said a privately-owned entity that is independent of the government and the public will have much greater flexibility in making difficult decisions based on business rationale.
Turning Proton private will also enable the DRB-Hicom group to streamline its own automotive assets in the context of Proton being part of the group, he added.

originally posted: Bernama Auto

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Khazanah To Divest Proton Stake To DRB-Hicom For RM1.291 Billion

Khazanah Nasional Bhd has announced that it will divest its 42.74 per cent stake in Proton Holdings Bhd to DRB-Hicom Bhd via a conditional sale with a price consideration of RM5.50 per share or RM1.291 billion.

In a statement today, Khazanah said the decision was made following due deliberation and detailed evaluation of various proposals to ensure that due process was observed, proper financial value was received and that the new shareholder would be able to bring the national auto maker to the next level of strategic growth in line with the aspirations of the industrial development of the national automotive sector.

The divestment is still subject to, among others, the approval of the shareholders of DRB-Hicom.

"Upon completion of the sale and purchase agreement, DRB-Hicom will be obliged to undertake a mandatory general offer on the remaining Proton shares," the government's investment arm said.

Khazanah Managing Director Tan Sri Azman Mokhtar said pursuant to a thorough assessment of its proposal, which offered a defined and executable business strategy, DRB-Hicom was identified as the appropriate party to acquire the interest in Proton.

"DRB-Hicom's proposal also demonstrated the company's extensive involvement in the automotive sector and its network of strategic partnerships, both local and international.

"DRB-Hicom's proposed strategy and business plan provides an effective platform to enhance Proton's sustainability and meet its long-term growth needs.

"It also submitted an offer price that was acceptable to Khazanah," he said.

The announcement by the government's investment arm answers a long-standing question on which party will acquire the substantial stake in the national auto maker to drive the company to greater success.

For the past months, many parties have directly or indirectly declared interest to acquire a stake in Proton.

Other than DRB-Hicom, Proton Holdings Chairman Datuk Seri Mohd Nadzmi Salleh has also come forward to declare his interest in the shares.

Trading in the shares of Proton Holdings and conglomerate DRB-Hicom Bhd were suspended from 9am to 5pm today pending an announcement.

Proton shares closed at RM5.18 on Friday while DRB-Hicom at RM2.17.

Meanwhile in a filing to Bursa Malaysia, DRB-Hicom which is linked to tycoon Tan Sri Syed Mokhtar al-Bukhary, said the proposed acquisition was expected to create business synergies and opportunities for DRB-Hicom group and Proton to augment the localisation and local vendor programmes.

It added that DRB-Hicom would maintain its intention and interest to safeguard the national car company while at the same time encourage, facilitate, grow and enhance Malaysia's national automotive industry, hence making Malaysia a preferred automotive hub capable of rivalling its neighbours.

"DRB-Hicom Group is one of the major players in the automotive industry in Malaysia, being involved in the whole integrated chain of the automotive ecosystem such as manufacturing and supply of automotive components, assembly, distribution and sales of motorcycles and commercial vehicles as well as the distribution and sales of passenger cars.

"The proposed MGO (mandatory general offer) provides an opportunity for DRB-Hicom to further increase its shareholding in Proton after the acquisition, thereby resulting in Proton becoming a subsidiary of DRB-HICOM in the event that the proposed MGO is successful," the company said.

DRB-Hicom said the proposals WEre not expected to have any effect on the earnings and earnings per share of DRB-Hicom Group for the financial year ending March 31, 2012 since the proposals were only expected to be completed in the second quarter of 2012.

It added that the proposals were expected to contribute positively to the future earnings of the group since Proton was already income-generating.

originally posted: Bernama Auto

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DRB-Hicom Is Likely To By 42.7% Stake In Proton From Khazanah Nasional

Ex Prime Minister and also being Proton’s advisor, Tun Dr. Mahathir Mohamad revealed that Khazanah Holdings is likely to sell 42.7% stake in Proton Holdings Bhd  to DRB-Hicom. According to Tun Mahathir, Khazanah wasn’t perform their task very well in injecting money into Proton which needs funds for its research and development in producing new products.

Tun Mahathir believed that DRB would be capable in aiding Proton’s development due to its financial and management capabilities.

“I worry about the buyer (DRB-Hicom) having enough money to inject into Proton. The shares it will be buying are above market price, which will make profitability difficult. But I believe in DRB-Hicom’s capabilities,” said Mahathir at the MIDF INvestment Forum in Langkawi.

"DRB Hicom is quite well run. They also produce cars for Suzuki, Mercedes and Volkswagen. This company also belongs to the Al-Bukhary Group, which has a lot of other businesses, including port operations. They seem to be able to do business," the former prime minister said in an interview with Bernama and Bloomberg.

 

Khazanah Nasional as Proton’s major shareholder also approached several other companies such as UME Holdings Bhd, Sime Darby Motors, Hyundai-Berjaya Sdn Bhd and Naza Group to sell its stake.

Tun Mahathir hoped Khazanah Nasional would sell its stake at a reasonable price.

"Proton needs financing. So, it must have some people who can inject money into Proton. If the price is too high, it will become difficult for the investors to turn the company around," he said.

Informed by Tun Mahathir, Khazanah Nasional has no plans to sell its stake to foreign companies as Proton would lose its identity.

"Proton needs to remain as the national car and strengthen its engineering capability," added Tun Mahathir.

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Limited Growth For Automotive Industry Next Year

The outlook for automotive sales was limited for the next year moving forward as the current industry scenario is lackluster on the back of weak sales and foreign exchange pressures.

RHB Research Institute Sdn Bhd (RHB Research) analyst Alexander Chia revealed, “The September quarter was dismal for earnings. Four of the six auto stocks under our coverage reported earnings that were below expectations.

“We expect the total industry volume (TIV) to remain flat in 2012 with auto sales estimated at 607,000 units. Although the new model pipeline looks strong, the expected slowdown in the economy will likely put a dent on consumer discretionary spending with some potential buyers possibly opting to postpone purchases or trade down to a less expensive model,” he opined.

Although Proton Holdings Bhd (Proton) and DRB-Hicom Bhd (DRB) were broadly in line with RHB Research’s expectations, both suffered from large year-on-year (y-o-y) decline in earnings.

Proton’s earnings for the first half of financial year 2012 ending March (1HFY12) declined 87 per cent y-o-y due to losses at Group Lotus from expenses associated with its ongoing five-year turnaround plan.

The national carmaker’s market share of the industry was 27.1 per cent year-to-date (January to October), trailing Perodua which had a 28.9 per cent share over the same period.

Despite maiden associate contributions from Pos Malaysia, DRB’s 1HFY12 earnings fell 33 per cent y-o-y due to the 9.6 per cent decline in automotive profit from weaker earnings at 34 per cent owned Honda Malaysia and higher effective tax rates.

The strength of the yen was blamed for some of the weaker earnings at APM Automotive Holding Bhd and MBM Resources Bhd (MBM).

MBM’s 23.6 per cent-owned associate Perodua saw margins squeezed by the higher yen resulting in nine month 2011 associate earnings falling 15 per cent y-o-y despite Perodua sales volumes only falling 9.9 per cent y-o-y.

UMW Holdings Bhd’s third quarter of 2011 earnings were blighted by lower contributions from Perodua, continued losses at 22.3 per cent owned WSP Holdings Ltd, and other losses related to its various subsidiaries.

Chia had a mixed outlook for 2012, starting with the prospects for 4Q11 looking ‘unexciting’ due to the seasonal sales weakness arising from consumers’ preference to register their vehicles in the new year.

Supply constraints due to the floods in Thailand could also mean fewer compelling year-end sales promotions to entice buyers.

He listed the risks to the forecast, namely a stronger economy lifting car sales and favorable foreign exchange trends.

“We remain cautious on the prospects for stocks in the sector going into 2012. In addition to limited headroom for significant TIV growth in 2012, the key risk for the sector is margin compression arising from the recent strength of the yen and US dollar,” he stated.

For investors with a larger risk appetite the research firm pegged Proton with a fair value RM5 per share on the back of potential merger and acquisition activity.

Originally posted: TheBorneoPost

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DRB-HICOM in Talks to Manufacture Hybrid Vehicles

 

DRB-HICOM Bhd is in talks with potential partners to manufacture hybrid/electric vehicles in Malaysia, with the company expecting to “finalise something” by next year, a senior company official said.

 

“We are talking to two or three parties now and hope to finalise something within 2010. It would take 18 to 24 months after finalisation for the whole thing to come on stream,” group director for automotive Datuk Nik Hamdan Nik Hassan told a press conference yesterday.

 

He said the move was in line with the Government’s decision to encourage the development of hybrid and green technologies.

 

Under the revised National Automotive Policy in October, the Government had announced that local assemblers and manufacturers of hybrid/electric vehicles and the development of related infrastructure would be given 100% investment tax allowance or pioneer status for a period of 10 years.

 

They would also enjoy an exemption of 50% on excise duty for locally assembled/manufactured hybrid or electric vehicles or provision of grants under the Industrial Adjustment Fund.

Similar incentives would also be given to manufacturers of selected critical components supporting hybrid/electric vehicles.

 

Currently, Honda Malaysia Sdn Bhd and UMW Toyota Motor Sdn Bhd are the only two official franchise holders offering their own hybrid models in Malaysia – the Honda Civic Hybrid and Toyota Prius respectively.

The Honda Civic Hybrid and Toyota Prius are priced from RM129,000 and RM175,000 respectively.

 

“Honda and Toyota have hybrids now. Rather than just importing, we should consider manufacturing as well, especially where the Government has introduced incentives,” Nik Hamdan said.

 

DRB-HICOM, through its unit Modenas (Motosikal Dan Enjin Nasional Sdn Bhd), is already in joint development works with Petronas and Universiti Sains Malaysia to build hybrid/electric motorcycles.

 

“We’re looking at commercialising these units in the months to come and hope to introduce these bikes into the market,” Nik Hamdan said, adding that already there were running prototypes being tested.

 

Meanwhile, DRB-HICOM expects a 3% growth in its local automotive market share to 120,000 vehicles in an expected total industry volume (TIV) of 540,000 for 2010.

It currently holds a 19% share of the country’s TIV which DRB-HICOM has forecast to close at 525,000 units this year.

 

The group plans to launch at least 10 new models and upgrades of its various marques and this is expected to spur the growth of its automotive business in the coming year, according to Nik Hamdan.

Among the new launches for next year would be the Audi A5 and R8 by DRB-HICOM’s subsidiary, Euromobil Sdn Bhd.

 

Nik Hamdan said the group invested more than RM10mil to enhance the Audi brand image in Malaysia and that “our target is to make the Audi brand the top three premium car in Malaysia.”

 

DRB-HICOM distributes and assembles foreign marques such as Audi, Mercedes Benz, Honda, Suzuki, Mitsubishi, Isuzu, Mahindra as well as local marques such as Proton, HICOM Perkasa and Modenas.

 

The group will be launching two Suzuki models via its associate company, Suzuki Malaysia Automobile Sdn Bhd, with plans to appoint four new dealers, increasing total dealerships to 34 nationwide.

 

For the Honda marque, Nik Hamdan said the group was targeting to sell 40,000 units in 2010 versus 37,000 units sold so far this year, adding that there were plans to increase the local content of some of its models to 60% from about 34% currently.

 

He added that the group’s associate company, Mitsubishi Motors Malaysia Sdn Bhd, was looking at a 25% increase in sales to 10,000 units next year from 8,000 units sold this year.

Variants to be launched include the Pajero and Lancer models, he said.

 

DRB-HICOM is also investing RM20mil to beef up all its 40 3S (sales, service and spare parts) centres nationwide. The group is also embarking aggressively to export its motorcycles via Modenas.

 

“We’re looking at the huge Indochina and Indonesian market. I think Indonesia alone can cater to 5 million motorcycles,” Nik Hamdan said.

 

source: thestar

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