Tuesday 19 Mar 2024
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KUALA LUMPUR (July 14): Hong Leong IB (HLIB) Institutional Research has maintained its “Buy” rating on DRB-Hicom Bhd (DRB) with RM2.26 target price (+34.5% upside), and said despite assuming Proton’s RM1.5 billion RCCPS, it remains sanguine on DRB benefiting from Proton partnering Geely and a long term re-rating catalyst on DRB’s valuation, as Geely agreed to support Proton’s turnaround plan with its technology, platform and skillset.

In a trading idea note today, the research house said DRB‘s forward earnings will improve drastically from reduced stake exposure to Proton’s immediate loss and discontinued exposure to Lotus’s loss (full disposal).

“DRB also benefits from retaining part of Proton’s valuable non-core assets (including Shah Alam plant and land), cash proceeds of UK£100 million (RM560 million) from Lotus disposal and RM567 million payment from Proton.

“On the back of positive hourly chart and bottoming up daily indicators coupled with the bullish Harami pattern, share prices are likely to test RM1.74-1.86 zones before reaching our long term target at RM1.99.

“Key supports are RM1.58-1.63. Cut loss at RM1.56,” it said.

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