Author: DoggieInvestor   |   Latest post: Thu, 29 Aug 2019, 6:37 PM


DRB-Hicom - Reaching an Inflection Point?

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Many may not realize that DRB-Hicom share price has surged over 200% in the last 3 years. In July-2016, DRB-Hicom's share price hit a bottom of RM 0.86 and today it is back to RM 2.63, an increase of 200% in 3-year, a compounded annual return of 45%. DRB-Hicom should be one of the best performing stocks on Bursa Malaysia. 

DRB is a big conglomerate in Malaysia. Its businesses emcompass financial services, automobile assembly and manufacturing (Proton), and also a substantial stake in POS Malaysia. 

Below is the segmental breakdown of DRB-Hicom Quarterly Results for 4Q19 ending 31st March 2019. 

What is interesting to note is that Automotive Segment Revenue grew 30.6% YoY, mainly fuelled by strong Proton X70 sales. According to the company Presentation Deck, Proton delivered 14,000 units of X70 in 4QFY19. The average Retail Selling Price (RSP) of X70 is about RM 120,000. Assuming auto dealer takes a 10% cut form the RSP, Revenue from X70 sales in 1QFY19 amounted to RM 1.5bn, or about 73% of DRB-Hicom Automotive revenue. 


There are already a lot of speculation that Proton will launch a new model, X50, within the price range of RM 90k, to compete with Honda HR-V and Mazda CX 3. In case you don't know, Geely China, the largest domestic automaker in China, owns a 49.9% stake in Proton. The X50 model will use Geely China BinYue model. If you go to China social media, WeChat or Weibo, you will see China YouTubers test driving BinYue model on the road. BinYue model is equipped with Level 2 ADAS. The car will automatically push the brake for the driver when the sensors detect obstable in front. It also features Lane Departure Warning System to sound the alarm to the driver when the car veers off its lane. 

There is even more bargains for the BinYue customer. Geely's cars use Baidu Map, which also has voice command function to navigate on the road, using your voice, and keeping your eyes on the road. If you ever visit a Proton showroom, X70 also comes with a free 4G sim card, embedded in the car, giving you 1GB of free data every month to listen to FREE Cloud Music platform. 

Geely has brought a whole lots of new automobile technology to Proton. If you monitor China autonomous driving technology, you will know that sooner or later, our car will be equipped with a super computer that drives by itself. 

Baidu has already made many announcements with China domestic auto makers to bring their Apollo self-driving technology to automakers in the foreseable future. 

It will not be long until we see Proton's Car drive by super computer on the road, in Malaysia. 

Bad news is that Global Automakers are pretty much pessimistic about 2H19 global auto sales. That's pretty much due to the on-going trade spat between the world's largest economies. 

If history is any good guide into the future, global economy will always grow in the long run. It may not be the best time to buy DRB Hicom, given that the stock has gone up 200% in the last 3 years. What is clear to us now is that Proton is going back to its glory days in the near future. 

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michaelwong So how can you you proof your points beyond doubts where certain stocks like G3 stock price has shoot beyond an imaginary doubts where there's no strong signed to support its near fundermentals growth as compared to DRB ?
30/07/2019 11:35 PM
ChoCho in stock market, write based on hindsight won't make money. Please analyse foresight instead.
31/07/2019 12:28 AM
DoggieInvestor just go and check Geely annual car sales volume in China in the last 10 years. Proton X70 is using Geely technology and Geely acquired Volvo back in 2010. I don't like to give stock recommendation. I believe investors should learn enough and make their own decision. It's quite clear from DRB Hicom PPT deck that they are expecting a strong turnaround at Proton by end of 2019. That's why the share price surged >50% YTD. If you bother to visit any Proton 4S shops in Malaysia, you will learn so much more than the average sell side analysts are writing in the reports, which is simply converting financial numbers into texts.
31/07/2019 1:28 AM
DoggieInvestor @michaelwong: Good Investors make the most money from the market when they see through how a business will evolve and progress into the longest possible predictable path. If you can't see the fundamentals improvements of Proton business, it's either i am wrong or you couldn't see what i see.

Sell-side analysts have been mostly bearish on DRB Hicom in the last 3 years and yet the stock is up 200% in the last 3 years.
31/07/2019 1:32 AM
DoggieInvestor Technical Analysis is an very old tool.....people used it before the great depression in 1929.
01/08/2019 10:49 AM
DoggieInvestor DRB-Hicom -> RM2.80
19/08/2019 7:04 PM

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