DRBHCOM (1619) : DRB-Hicom - Tales of two automakers
Target RM2.30 (Target: HOLD)
DRB’s 1HFY3/15 core net profit made up 55% of our and 43% of consensus full-year forecasts. We deem this as in line as we expect a weaker 2HFY15 given that Honda sales is slowing down as the effect of new models launched earlier this year starts to wane, and that sales of the newly launched Proton Iriz has yet to pick up pace. No dividend was declared, as expected. We make no changes to our EPS forecasts and target price, based on a 30% discount to NTA. We keep our Hold rating on the stock due to the lingering negative sentiment surrounding Proton. Switch to Berjaya Auto, our top auto pick.
Proton still a drag
DRB’s 1HFY3/15 core net profit dropped 19.9% yoy to RM156.3m. This was mainly due to the dire performance of its automotive division, which recorded RM8.5m losses in 2QFY15 vs. RM147.4m profit in 2QFY13. We believe this was mainly attributable to the persistent losses at Proton, which continued to be bogged down by fierce competition in the local automotive scene. In 9MCY14, Proton’s sales volume tumbled 16% yoy to 90,749 units.
Honda continues to sprint
DRB’s associate Honda Malaysia has been the group’s best performer this year. Its 9MCY14 sales volume surged 56% yoy to 62,935 units, largely due to the overwhelming response to its new models, mainly the new City and CRV. As a result, Honda Malaysia’s contribution to DRB’s bottomline jumped 338% in 2QFY15 to RM72.8m. However, we note, that over the past few months, its monthly sales volume has slowed down as the impact of its new models starts to wane and as its competitors continue to launch new models of their own.
Awaiting the Iriz factor
Proton Iriz, its new model launched at end-September, has been receiving positive reviews and was touted as the best Proton model ever. However, this has not translated to an overwhelming sales order as yet. We believe that given the negative perception embedded on the brand after decades of reliability issues, customers are taking more time to judge whether this model is really is a change from Proton’s past models.
Source: CIMB Daybreak - 28 November 2014
Target RM2.30 (Target: HOLD)
DRB’s 1HFY3/15 core net profit made up 55% of our and 43% of consensus full-year forecasts. We deem this as in line as we expect a weaker 2HFY15 given that Honda sales is slowing down as the effect of new models launched earlier this year starts to wane, and that sales of the newly launched Proton Iriz has yet to pick up pace. No dividend was declared, as expected. We make no changes to our EPS forecasts and target price, based on a 30% discount to NTA. We keep our Hold rating on the stock due to the lingering negative sentiment surrounding Proton. Switch to Berjaya Auto, our top auto pick.
Proton still a drag
DRB’s 1HFY3/15 core net profit dropped 19.9% yoy to RM156.3m. This was mainly due to the dire performance of its automotive division, which recorded RM8.5m losses in 2QFY15 vs. RM147.4m profit in 2QFY13. We believe this was mainly attributable to the persistent losses at Proton, which continued to be bogged down by fierce competition in the local automotive scene. In 9MCY14, Proton’s sales volume tumbled 16% yoy to 90,749 units.
Honda continues to sprint
DRB’s associate Honda Malaysia has been the group’s best performer this year. Its 9MCY14 sales volume surged 56% yoy to 62,935 units, largely due to the overwhelming response to its new models, mainly the new City and CRV. As a result, Honda Malaysia’s contribution to DRB’s bottomline jumped 338% in 2QFY15 to RM72.8m. However, we note, that over the past few months, its monthly sales volume has slowed down as the impact of its new models starts to wane and as its competitors continue to launch new models of their own.
Awaiting the Iriz factor
Proton Iriz, its new model launched at end-September, has been receiving positive reviews and was touted as the best Proton model ever. However, this has not translated to an overwhelming sales order as yet. We believe that given the negative perception embedded on the brand after decades of reliability issues, customers are taking more time to judge whether this model is really is a change from Proton’s past models.
Source: CIMB Daybreak - 28 November 2014
