News / Comments

Proton has finally launched a new Proton variant – Preve Hatchback with a pricing range RM76-RM80k. Surprisingly the COO of Proton Commercial stressed that name of the new model is known as Suprima S and it is at its own class, clearly to differentiate it from Preve’.

Suprima S has successfully obtained Australasian New Car Assessment Program (ANCAP) rating of 5 stars and claimed to be superior to other same class hatchbacks available in Malaysia market, which are priced >RM120k.

The new model is complete with several safety features: 1) Electronic Stability Control (ECS); 2) Traction Control (TC); 3) Brake Assist (BA); 4) Anti-Lock Braking System (ABS); 5) Electronic Brake Distribution (EBD); 6) 6 Airbags; 7) Reinforced Safety Structure (RESS); 8) Hill Hold Assist (HHA); and 9) Isofix for child-safety.

Tapping into Lotus Technology and Strong Branding - The ride and handling of Suprima S are devised by wellknown Lotus (wholly owned subsidiary of Proton), in enhancing driving experience and contributing confidence and comforts to drivers to deal with all road and weather conditions.

We are positive on the launching of Suprima S, which will enhance Proton’s product range offerings and help to regain back market confidence as well as market share.

With DRB working on Proton’s restructuring, Suprima S is poised to be the game changer in: 1) improving the standards and qualities of Proton’s car; and 2) changing the public’s perception of Proton (differentiation from Preve and an exclusive tag “Handling by Lotus”).

We expect Suprima S to receive positive response from the public, similar to the previous launch of Saga SV in mid-June, which has received over 20k orders (delivered ~8k units).

Risks

• Slowdown of Malaysia economy affecting car sales.
• Global automotive supply chain disruption.
• Slow integration of Proton and Pos.

Forecasts

Unchanged.

Rating

BUY

Positives –

• Acquiring and restructuring of Proton, to turn DRB into a major integrated automotive player in the region.
• Partnering VW group to set up regional hub in Malaysia.
• Honda Malaysia to set up regional hub for Hybrid car.
• Severely undervalued counter.
• Deftech awards of RM7.55bn over 7 years.
• Synergy of POS with DRB’s other business units.

Negatives –

• Bank tightening financing measures.

Valuation

Maintained Buy on DRB with unchanged Target Price of RM3.36 based on 20% discounts to SOP.

Source: Hong Leong Investment Bank Research - 19 Aug 2013