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



AmResearch has reaffirmed its "buy" call on Proton Holdings Bhd with an unchanged fair value of RM6.10 per share.

It said the national car manufacturer was in discussions to set up a contract assembly operation in India to be finalised by the end of the first-quarter.

"We believe Mahindra is a likely candidate given its existing joint-venture manufacturing operations with Renault and ready-sales network in India," the research house said in a statement today.

It said India opened up another huge Asian market for Proton, after China, and increased exports would help improve Proton''s plant utilisation which currently stood around 50 per cent and subsequently make a structural shift in its earnings trend.

Furthermore, it added the Indian venture would be an asset light, low-risk model given that a local partner undertook the asset investment and ownership.

"Besides offering the Saga, Persona and Exora models in India, Proton also plans to co-develop diesel-engine models for the market with a European carmaker," it said.

AmResearch also said Renault was renowned for its diesel-powered passenger models and it did not rule out a more comprehensive collaboration with the company in regards to Proton's global markets, forming in essence, a strategic alliance.

Proton recently completed a stake purchase in Renault's F1 team and this served as branding for its Lotus brand.

"We bear in mind that the technological advancement should trickle down to Proton models too," it said.

With the India venture adding up to the positive newsflow expected for Proton over the next 12 months, AmResearch said the newsflow should act as a strong share price catalyst amid low expectations on the stock. -- Bernama