KUALA LUMPUR (Jan 29): DRB-Hicom Bhd's 51%-owned indirect subsidiary Hicom-Teck See Manufacturing Malaysia Sdn Bhd (HTS) is partnering Shanghai-listed Jiangsu Xinquan Automotive Trim Co Ltd (XQ) to jointly design, develop and manufacture instrument panel, floor consoles and door trims and related components for vehicles, in Malaysia.

In a filing with Bursa Malaysia today, DRB-Hicom said HTS has entered into a shareholders agreement with XQ to form a joint venture (JV) company in Malaysia called Xinquan-Hicom Malaysia Sdn Bhd for the purpose.

XQ will hold a controlling 51% stake in the JV company, while HTS will own the remaining 49%.

"Via the participation of HTS in the JV company, the DRB-Hicom group will be able to continue supporting Proton’s business, which includes expansion into the Asean market.

"The JV company is also targeting to penetrate the Asean market with products manufactured using new technology," said DRB-Hicom. 

It added that HTS proposes to fund its initial capital contribution for the JV company from its internal funds and bank borrowings.

HTS is a 51%-owned subsidiary of Hicom Holdings Bhd, which in turn is a wholly-owned unit of DRB-Hicom. The company is involved in the manufacturing and sales of thermo plastic and thermo setting products.

Meanwhile, XQ's principal activity is manufacture and sales of automotive body parts.

"Upon receipt of the relevant approvals from the Chinese government for overseas investment, XQ will assign its rights and obligations under the shareholders agreement to Xinquan Development Hong Kong Ltd (XQ HK), a wholly-owned subsidiary to be incorporated in Hong Kong," said DRB-Hicom. 

"Barring any unforeseen circumstances, the proposed JV is expected to contribute positively to the future earnings of the group," it added.

DRB-Hicom shares closed unchanged at RM1.67 today, with 1.12 million shares done, bringing a market capitalisation of RM3.23 billion.