DRBHCOM (1619) - Uphill task for Geely if Proton deal goes through, research house says
KUALA LUMPUR, Feb 3 — China automotive firm Geely Automobile Holdings Ltd may be faced with a difficult task ahead if it succeeds in becoming Proton Holdings Bhd’s technical partner, CIMB Research said in a report yesterday.
The report cited by daily The Star said Geely will have to revitalise the national carmaker which has been bogged down with declining sales, deteriorating market share and incapable technical expertise.
Despite that, it also admitted that Geely has the potential to revitalise the local brand, in return for a stake in the Southeast Asian automotive market.
“Overall, we see this as a positive development towards Proton’s recovery as we expect the new potential partner to help Proton boost its manufacturing utilisation rate.
“Moreover, we expect the potential partner to provide support in terms of advanced technology, global reach and economies-of-scale,” the report said.
Geely, which among others owns Volvo Cars Corp and the London Taxi Company, was said to be in the lead to become the national carmaker’s technical partner, ahead of French carmakers PSA Group and Renault SA.
The Star reported that the Chinese company and the other two car manufacturing giants want at least 51 per cent in Proton’s manufacturing plant in Tanjung Malim.
It reported that the net value of the plant was estimated to be at RM501 million in March 2016.
“We are not surprised by this, as the plant is considered a prized asset for Proton’s potential partner as it would provide immediate access to car production facilities, which is valuable to a partner that targets the growing Southeast Asian market.
“The Government has also reportedly given the approval for a foreign company to own a majority stake in the assembly plant,” CIMB Research was quoted saying.
Yesterday, the English daily reported that several changes were made in the top management of Proton to prepare for the entry of a new technical partner.
The appointment of Abdul Rashid Musa to replace Rohime Shafie as the new chief executive was made effective yesterday.
Rohime was, meanwhile, appointed as DRB-Hicom’s chief automotive in the distribution, manufacturing and engineering division.
Last April, in a move to boost plummeting sales, the government provided RM1.5 billion in the form of soft loan to the national carmaker.
Several conditions were imposed prior to giving out the huge fund, which among others, include getting Proton to show a strategic plan to expand its business locally and in the international market.
According to the news report, Proton had sent out proposals to 14 original equipment manufacturers to be its partner from as early as June 2016.
DRBHCOM (1619) - Uphill task for Geely if Proton deal goes through, research house says - See more at: http://www.themalaymailonline.com/money/article/uphill-task-for-geely-if-proton-deal-goes-through-analyst-says#sthash.YA5Fhnuz.dpuf
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