Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
Research House: HWANGDBS

KUALA LUMPUR: Hwang DBS Vickers Research has raise its target price for PROTON HOLDINGS BHD [] to RM6.60, after upgrading valuation multiple to 0.7x CY11F NTA (vs. 0.5x previously).

'This is a 10% discount to its mean+1SD of 0.8x, which is its historical peak valuation (Fig. 4), and reflects its positive outlook for the consumer sector. With more than 40% capital appreciation potential, Proton remains a BUY,' it said in a report on Tuesday, Aug 24.

HDBSVR said Proton's annualised 1QFY11 profit beat its estimate, but was within consensus'.

While 1QFY11 revenue of RM2.3 billion (+1.2% q-o-q; +24% y-o-y) was within its estimate, EBIT margin rose 0.7ppt to 4.5% q-o-q (+1ppt y-o-y).

Domestic division revenue grew 7% q-o-q on the back of 3% increase in unit sales to 40,000 units (+10% y-o-y) and 4% higher average selling price to RM49,000 (+10% y-o-y).

'This was due to larger contribution from higher margin vehicles. Proton also benefited from reduced infighting among dealers (following the realignment of dealerships) and an improved inventory system,' it said.