KUALA LUMPUR (Jan 8): PublicInvest Research has upgraded DRB-Hicom Bhd (DRB) to “Outperform” at RM2.38 with an unchanged target price of RM2.80 after DRB announced that Perusahaan Otomobil Nasional Sdn Bhd (PONSB), its indirect 50.1%-owned subsidiary, has entered into a Memorandum of Understanding (MOU) with China Automotive Technology and Research Centre Co Ltd (CATARC) to collaborate in the field of automotive testing, research and development (R&D) and to maximize resources of China and Malaysia’s automotive industry.

Separately, DRB also entered into a MoU with Malaysia Automotive, Robotics And IoT Institute (MARii) for a collaboration on the development of academic programmes, courses and On-the-Job Training (OJT), establishment of Autonomous, Automated and Connected Vehicle (AACV) Test Bed in Cyberjaya and a full-fledged National Automotive Testing Centre in Tanjung Malim.

In a note today, the research house said this MoU shall be effective on the date of the MoU and valid for a period of 1 year and 24 months respectively.

It made no changes to its forecast, but upgraded its call on DRB to Outperform, given the upside of 18% to its unchanged target price of RM2.80.

PublicInvest Research said while no material details were provided, it understood that this is for the development of the country’s automotive industry by making Malaysia the next-generation vehicle (NxGV) hub in the region.

“It has been reported that under the National Automotive Policy (NAP) 2019, expected to be revealed this year, Malaysia will come out with the full definition of NxGV by 2022.

“We are positive on this collaboration as it could add value to the Group and provides strategic platform to explore future development of Malaysia’s automotive industry, perhaps translate to tangible gains in the long run,” it said.