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Author: GreenTrade   |   Latest post: Sun, 24 Mar 2019, 12:52 PM

 

DRB Hicom Is Worth RM 4

Author:   |    Publish date:


24/3/2019
DRB HICOM Current Price : 1.90



DRB's Proton has been on a WINNING STREAK!
It has HIT targets after targets and there seems to be NOTHING That could slow it down.

Imagine if a loss making DRB HICOM has been trading at an average of 2.00 for the past 7 years due to Proton's losses.

What would a Money Making Machine DRB- Proton look like?


1) CALCULATION OF DRB EARNINGS


Proton / Geely's Management  aims to sell 1 MILLION units of Proton in 10 years

Based on 8 top selling models, the Average Selling Price of Proton is RM 70k

1 million x RM 70,000 = RM 70 billion revenue.

Based on Geely’s Annual Report- Net Profit margin of 20% :

20% x RM 70 billion = RM 14 Billion Net Profit

RM 14 billion divide 10 years = RM 1.4 Billion

DRB’s 50.5% stake = RM 707 MILLION NET PROFIT PER YEAR

THAT is 36.5 Cents EPS just from PROTON.

DRB has other businesses that can easily generate the remaining 3.5 cents EPS or MORE.

 

Therefore,  full year EPS of 40 cents with a P/E of 10 would give

DRB A STRONG VALUATION OF RM 4



All of this will begin in 2019 as this is the turning point for Proton.


2) DRB WILL BE THE BIGGEST BENEFICIARY FROM US CHINA TRADE WARS

Due to rising uncertainty, Geely’s sales in China is expected to remain flattish in 2019.

If Tariffs were to be imposed on Geely / China, Geely’s resources and priorities will be on Proton. Proton is still owned by Malaysia which has positive trade relations with the rest of the world.

Geely is really really smart to diversify their risks into Proton.

Proton will be transformed into a Behemoth Automobile Giant that will produce MILLIONS of cars for the world.




3) PROTON'S EXPANSION IN PAKISTAN WILL UNLOCK MASSIVE POTENTIAL IN THE REGION

The automotive industry in Pakistan is the one of the fastest-growing industries of the country, accounting for 4% of Pakistan's GDP.

Pakistan is Neighbors of India.
India is expected to be the 3rd Largest automobile market in the world by 2021 ( Mckinsey 2018)
Proton’s expansion is extremely timely to capture rising demand from these countries.

Pakistan has strong trade relations with China





4) DRB IS NOT JUST ABOUT PROTON

DRB has recently sold its entire stake in Alam Flora for RM944.6 Million.

The group will net RM735.4 Million Gain from the disposal.

THAT IS an EASY 38 CENTS EPS which may be reflected in the upcoming quarters of 2019
Could there be a Special Dividend for loyal shareholder?

Based on current price :
10 cents? =  5%+ Dividend Yield
20 cents? = 10%+ Dividend Yield





4) Dow Jones crashed 460 points. Bad Economy? DRB Will Gain!

Out of the Dow 30 components, Boeing has the most weightage with 11.26%. Boeing dropped due to its unfortunate plane crash. United health will be bearish due to the white house proposal to lower drug prices. Goldman Sachs has bad news.

 

Despite the 450 point drop, McDonalds and Coca Cola is still up ( Dow Components) .
Why? People will still eat them no matter what.

 

Drb’s Proton X70 has over 20,000 bookings as of February 2019. Do you think the die-hard Proton fans are going to cancel their orders after being on the WAITING LIST for MONTHS  and paying booking fees? People still have to buy cars to reach from one place to another. Grab cars still use Proton.


Actually, IF the economy is bad, more people will Buy Proton cars because it is so CHEAP and VALUE for money.

 

Despite FBMKLCI 20 point drop on Thursday 21st March, DRB was still UP.

(Likewise for MYEG and Hibiscus which increased in price substantially for the past 2 bearish days )



 


5) SHAREHOLDING ANALYSIS

As at 18 March 2019, EPF has Increased its stake by 1.36% from 29 June 2018

Lembaga Tabung Haji DID NOT transfer out its 7.42% stake to Urusharta Jamaah (The Government’s SPV) unlike many other non- performing stocks in its portfolio. ( Despite the fact that Urusharta Jamaah bought hundreds of LTH stocks at premiums of an average 200%+)  This may indicate that DRB is a Performing Asset and has potential of more than ...
 

Etika Strategy Sdn Bhd (55.92% stake) is owned by Syed Mokthar is unlikely to be sold or it may lose ownership for Proton.

These 3 major shareholders control 73.32% of the company and should be in it for the long run.


The remaining 26.62% is worth RM 977 million ( 241million USD) as of 22nd March 2019 and should be quite light to push considering the high profile stakeholders of the company.


( Syed Mokhtar – Net worth 1.9 billion USD)
( EPF – Receives monthly deposits of RM 1.9 billion )
( Li Shufu – Geely’s Founder – Net worth 14.3 billion USD )
( China Investors that are known to furiously push up shares in their home markets )


 
        





6) FEATURED WARRANT

DRB- C74. ( Recently listed )


With 191 days till expiry, there is plenty of time for it to be traded before DRB goes up.

If DRB hits 4.00, this warrant's intrinsic value is  0.59 which is a 694% return on investment.

Greentrades have a preference of trading Macquarie Warrants due to the availability of its live matrix , transparency and liquidity offered.



7) TECHNICAL ANALYSIS


  


 

W-Shaped Pattern is forming and a Breakout is IMMINENT
MACD Crossing indicates positive momentum ahead.



8) SUMMARY

Do you want to Buy DRB at RM 2.00 when Massive Earnings have not been priced into the share price 

                                                             OR

Do you want to Buy DRB at RM 4.00 from Smart Investors who bought at RM 2.00 




Thanks for reading  
Greentrade$

https://www.facebook.com/Greentrades/


 

DISCLAIMER

Trade at your own risk. This article is not an investment recommendation in any way. The author will not be responsible for any losses or decisions made.

 

 




 

 

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Labels: DRBHCOM

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Chart Stock Name Last Change Volume 
DRBHCOM 2.16 0.00 (0.00%)

  alivetoinvest likes this.
 
alivetoinvest yaa its really undervalued with NTA of 3.40

Monday can collect!
24/03/2019 1:05 PM
klsefunandlepak why u tell everyone.
I wan buy more below 2.00
24/03/2019 1:06 PM
GreenTrade if there is self driving cars,
Geely will be the front liner to conquer the segment
Geely’s technology will be implemented into Proton
Proton will be equipped with the latest and the best to compete in ASEAN and the world

Drb has nothing to worry about
24/03/2019 1:36 PM
Nicholasming91 Self driving? Impossible in malaysia. Due to road intersections ,Round abouts etc. Our GPS system cant even cope with it. Dont talk cock first , one major error of self driving car causing crash will completely halt its usage .
24/03/2019 1:38 PM
Nicholasming91 Even if self driving , China will be better in this technology than US. Especially China will lead in 5G
24/03/2019 1:39 PM
alivetoinvest https://www.thestar.com.my/news/nation/2019/03/24/mahathir-confident-proton-will-do-well-in-pakistan/#GhvuJsoJzS82kLsO.99
24/03/2019 1:51 PM
Bruce88 Wow $4, have to sailing on Monday !
24/03/2019 3:17 PM
ramada Got potential, seriously. The author got potential to be famous artist.
24/03/2019 3:18 PM
GreatWarrants Good article. Looks like RM 4 coming... Let me buy first...
24/03/2019 3:22 PM
moneykj Wow...Double of Amban target. Congrats Drb shareholders...hehe
24/03/2019 4:27 PM
Keith Han Different market got different needs. Geely got different strategic for different market.
Lyn & Co & 几何 will be high fashion , semi-electric car for Europe market

Proton will be traditional petrol car for ASEAN market. The self driving car still long way to happen in ASEAN country.

Just look at how Geely strategy their future plan.
I'm quite confident to their management. With good management and good strategy, company sure grow.

Besides that, Looking forward AVIS to grab government project from SPANCO. Government only purpose toyota, proton and honda car only, quite high chance avis able grab the project since they got benefit on lower cost to purchase proton and honda car ( under drb )

As avis get the project, it will benefit both avis and proton , will bring more income to DRB.
24/03/2019 5:44 PM
Keith Han Sorry. Just some update on your article.

https://www.thestar.com.my/business/business-news/2019/03/23/geely-aims-to-sell-one-million-proton-cars-in-10-years/

Base on this article , I'm really don't know how they name their title. In the content , geely actually aim to sell 400,000 proton car in a year at 2027( 8 year more ) - Base on your calculation , should be around 8bil profit = 400sen eps.

Of course all is Geely target. Just hope they able to achieve it.
24/03/2019 6:01 PM
Nicholasming91 U guys have to stop thinking about proton car sales only.. the scarier thing is their 3S and 4S service centre expansion..
24/03/2019 7:59 PM
klsefunandlepak The upgraded service centers are really good . Fast, efficient and clean. Looks nice also when you enter, got the slightly premium feel. I am really really proud and impressed with Proton’s transformation.
24/03/2019 8:53 PM
Nicholasming91 Any price below 2 is a bargain as lowest is only 1.6 . Now at 1.9 only up 18%
24/03/2019 10:00 PM
Veron_teo even can go 4 you will keep? if tomorrow 2.5 I guess u all run like mad d
24/03/2019 10:10 PM
Nicholasming91 Luan luan lai give tp4.0 . Crazy punya orang. Until next QR slowly climb to 2.4 . This is not KYY counter.
24/03/2019 10:12 PM
Veron_teo I say worth 40
24/03/2019 10:37 PM
newbie911 Track record so poor...how to get tp 4...
24/03/2019 10:49 PM
calvintaneng Hi guys

Don't listen to what Calvin say or whoever say

STUDY THE DETAILS VERY VERY VERY CAREFULLY YOURSELF

https://klse.i3investor.com/blogs/www.eaglevisioninvest.com/199300.jsp
24/03/2019 11:08 PM
Arquebus1989 Great writeup on the potential. It's a little optimistic to say that Proton will achieve the same 20% net margin as Geely in China. Geely in China enjoys lower costs because of significantly bigger scale and also the benefits of a holistic car manufacturing ecosystem.

What I know from local parts manufacturers here is that the costs for spare parts here are in average 20% higher than in China. Many parts are also not domestically produced and have to be sourced abroad.
25/03/2019 9:24 AM
Tan Frankie aims to sell 1 MILLION -aim only la
25/03/2019 12:32 PM


 

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