-  We maintain BUY on DRB-HIcom Bhd, with a fair value of RM3.65/share – a 15% discount to our SOP value of RM4.31/share.

-  DRB-Hicom’s subsidiary Proton Holdings Bhd has received 4,000 pre-orders for its newly-launched 1.3L Proton Saga SV, less than a week after its unveiling.

-  Business Times over the weekend reported Proton Edar Sdn Bhd CEO Hisham Othman as saying that the huge number, although merely pre-orders, far exceeded Proton's initial sales target of 2,000 units a month.

-  He said Proton was working with Malayan Banking and AmBank Group to offer a minimum monthly instalment of RM250 for a year for the new Saga SV. The new Saga is priced between RM33,438 and RM36,888 in Peninsular Malaysia – 10% to 13% cheaper than the earlier variants.

-  Proton is aiming to capture 30% of the country’s Bsegment market (vs. 24% currently). Hisham said the profit margin for the model is small, but that would be made up by higher sales.

-  Business Times reported that Proton sells an average of slightly more than 5,000 units of its whole range of Saga model a month, comprising five variants and excluding two variants of the new model.

-  Overall, including the Exora and the Inspira, Proton sales total about 12,000 units a month. DRB-Hicom has said that Proton is targeting to sell 175,000 units in FY14F. We believe the launch of the new Proton Saga SV would help drive sales. The Saga range makes up for about 40% of sales.

-  Proton’s market share declined to 22.5% in 2012 from 26.4% in 2011, with the sales volume falling by 11% to 141,121 units from 158,601 units.

-  According to a recent Starbiz report, up till April this year, Proton's overall market share stood at 21.3% of the passenger car market, still below its closest competitor Perodua’s 30.6%.

-  The market is looking forward to its collaboration with Honda. The two parties have finalised the details of their proposed collaboration in platform sharing. The first variant is expected within a couple of months.

-  The Proton Preve hatchback will be launched after the Hari Raya celebrations. One of DRB-Hicom’s primary focuses now is to cut losses at its Lotus operations in the UK.

Source: AmeSecurities