- 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 over the weekend launched a new Proton model – Suprima S – a five-door C-segment hatchback with a 1.6 turbo Campro engine.

- With the S as the giveaway to a sporty look, the model comes in two variants – the Executive and the Premium. They retail for between RM76,338 and RM79,988 on-the-road, with a five year warranty and road-assist.

- This is half the price of the Volkswagen (VW) Golf, a Csegment hatchback. DRB-Hicom is VW’s strategic partner in the country (DRB-Hicom currently assembles the VW Passat sedan in Pekan and plans to produce the Polo and Jetta for the local and regional markets).

- The Suprima S is also ~30%-40% cheaper than the Citreon C4 1.6 and Ford Focus hatchbacks. Two of the best sellers in the C-segment are the Honda Civic (RM126k) and Toyota Corolla Altis (RM107k-RM133k), though both have yet to have a Csegment hatchback here.

- DRB-Hicom could potentially steal market share from the others, and at the same time, offer a choice to those who would otherwise not be able to afford the more expensive hatchbacks. We maintain our forecasts as the launch of the Preve hatchback has long been anticipated.

- Though a brand new model, the Suprima S has largely been tagged as the Preve hatchback given that it shares similar core features with the Preve sedan that was launched 16 months ago. Specifically, they have the same width, height and wheelbase. The new Suprima S comes with six airbags.

- Notably, the Premium version comes with a push start button and cruise control. The “Handling by Lotus” tagline, which began with the Satria GTi, comes back into vogue.

- The unveiling follows the launch two months ago of a variant of the Saga FLX model (B-segment) – the 1.3LSaga SV (Super Value) – which has been widely well-received.

- Following its clean-up of Lotus over the past one year, DRBHicom is now poised to enter into a key collaboration with Honda via the sharing of the Japanese carmaker’s car platform, which is widely-touted to be for the Perdana replacement model.

- DRB-Hicom is also reportedly working a global small car project. The continuing launches for Proton bode well for the group.

Source: AmeSecurities