KUALA LUMPUR (July 24): Hong Leong IB (HLIB) Research has maintained its “Buy’ rating on DRB-Hicom Bhd at RM2.50 with a higher target price (TP) of RM4.15 (from RM3.03) and said its meeting with DRB-Hicom has re-affirmed its positive view on the group’s turnaround.
In a note today, the research house said Proton Holdings Bhd registered its first ever quarterly profit in 4QFY19 (since FY11) due to cost-cutting measures, improved operation efficiency, higher Proton sales and new X70 contributions.
HLIB Research said it expects stronger Proton contribution in upcoming quarters, given the continued strong Proton sales volume on the back of attractive new model line-ups.
“DRB-Hicom’s 53.5% Pos Malaysia Bhd will be reporting improved bottomline in upcoming quarters (post disappointing 4QFY19, dragged by various one-offs) while potentially benefiting from MCMC’s review on stamp prices.
“Furthermore, DRB-Hicom has large undeveloped landbanks with combined market value of RM6.5 billion (RM3.35/share).
“We reiterate our Buy recommendation with higher TP: RM4.15 (from RM3.03) based on 10% discount to SOP: RM4.61, following revision on our SOP valuation method,” it said.