DRB-Hicom falls as Proton faces Goldstar lawsuit

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KUALA LUMPUR (Jan 18): DRB-Hicom Bhd shares fell as much as 11 sen or 6.15% to RM1.68 so far today after the group said its indirect subsidiary Proton Automobiles (China) Ltd received a civil complaint from Goldstar Heavy Industrial Co Ltd.

Yesterday, DRB-Hicom said in a statement to Bursa Malaysia that Goldstar is claiming, inter alia, the sum of RMB 860.61 million (RM522.91 million).

The group said Goldstar's claims are in relation to the equity joint venture contract dated April 17, 2015 on the establishment of joint venture company Goldstar Lotus Automobile Co Ltd and its termination on Jan 22, 2018, among others.

Proton Holdings Bhd, Lotus Group International Ltd and Goldstar are signatories to the contract, according to DRB-Hicom. Proton Holdings is a 50.1%-owned subsidiary of DRB-Hicom.

Today, Hong Leong Investment Bank Bhd analyst Daniel Wong wrote in a note: "We are negatively surprised with the announcement of RM522.9 million claim by Goldstar to DRB-Hicom, which may have significant impact to DRB-Hicom's bottomline and book value.

"We still maintain (our) BUY recommendation on DRB-Hicom with unchanged target price at RM2.80, pending further clarification from (DRB-Hicom's) management," Wong said.

At 10:29am today, DRB-Hicom shares stood at RM1.70 with 2.86 million shares changing hands. DRB-Hicom was among Bursa Malaysia's top decliners.