DRB-Hicom (DRB) reported sequentially stronger 1QFY24 core net profit of RM91.5m (+55.7% QoQ) attributed to improved performance across the Group’s businesses, though weaker YoY (-15.2%) due to higher taxation charges. Results were within both our and consensus estimates, at 28.5% and 27.1% of full-year forecasts respectively. We keep or forecasts unchanged and retained our Neutral call on DRB with an unchanged sum-of-parts (SOP) based TP of RM1.70.

• 1QFY24 Revenue increased to RM4.3bn (+5.6% YoY, +15.0% QoQ) onimproved performance across the Group’s businesses. Automotive revenueincreased to RM3.0bn (+0.8% YoY, +18.3% QoQ) on higher volume andbetter sales mix. PROTON’s sales volume increased to 39,150 units in1QFY24 (4QFY23: 34,143 units), mainly driven by Proton Saga, Proton S70sedan and the X-series SUV line-up. Banking sector’s revenue increased toRM510.4m (+34.6% YoY, +11.9% QoQ) on higher financing income andcustomer base expansion. Property segment’s revenue jumped to RM79.1m(+63.1% YoY, +132.6% QoQ) on higher sales of industrial land and propertydevelopment projects. Aerospace & Defence (A&D) posted higher revenueof RM187.8m (+11.4% YoY) owing to higher deliveries of aircraft parts,though falling by 13.6% QoQ due to lower defense product deliveriesfollowing the completion of AV8. Services segment also registered strongerrevenue, in line with the rising number of flights.

• 1QFY24 Core Net profit increased by 55.7% QoQ to RM91.5m, attributedto higher revenue across all business segments. Automotive’s profit beforetax (PBT) increased by 17.2% QoQ to RM181.7m on better sales mix andhigher sales volume. A&D, Services and Property segment turned profitablewhile Postal business’ losses narrowed in this quarter on higher revenue.

• Subdued outlook. While Malaysia’s Total Industry Volume (TIV) recordedoutstanding performance in 2023. Forward car sales orders are showingsigns of easing. A number of factors including elevated living costs, softerdemand for discretionary items due to concerns over targeted subsidyrationalisation and lack of catalyst for the auto sector may restrict growth insales volume. In addition, stiff competition from the influx of new modellaunches and competitive pricing in the market may put pressure on thesector margins, thereby restricting earnings growth.

Source: PublicInvest Research - 24 May 2024