About DRB-Hicom Bhd

DRB-HICOM Berhad is an investment holding company. The Company operates through three segments: Automotive, Services, and Property, Asset and Construction.

The Automotive segment is engaged in manufacturing, assembly, vehicles importation, pre-delivery inspection, composite manufacturing, vehicles leasing, distribution and sale of motor vehicles, military vehicles, motorcycles and special purpose vehicles, including sale of related spares and services.

The services segment is engaged in concession, such as vehicle inspection, solid waste management and airport ground handling business; banking, including Islamic banking and related financial services; postal, such as mail, courier and retail; integrated logistics and inventory solutions, and education, including higher education and vocational training institution.

The Property, Asset and Construction segment is involved in property holding, development and construction work.

The Board of Directors of DRB-Hicom consist of directors with high involvement in many Malaysia’s big corporation.

• Notably Brigadiel General (K) Tan Sri Dato’ Sri (Dr) Haji Mohd Khamil bin Jamil, who is the Chairman, non-independent non-executive director of DRB-Hicom is also the director or chairman of almost all the DRB-Hicom large subsidiary companies, such as POS Malaysia, Proton Holdings Bhd etc.
• Dato’ Sri Syed Faisal Albar bin Syed A.R. Albar, who is the Group MD of DRB-Hicom, is also the Director of Kapar Energy Ventures.
• Dato’ Ibrahim bin Taib, independent Non-Executive Director of DRB-Hicom, is also the Director of Iskandar Investment Bhd.

Based on Financial Year (FY) 2017 full year results, DRB-Hicom achieved RM 12 billion turnover, which is categorised as a large conglomerate based on turnover value and the company’s business diversity. Other aspects of the company’s FY2017 financial results are illustrated in the table below.

DRB-Hicom’s revenue has its ups and downs over the years, with the highest revenue of RM 14.2 billion in FY2014 to the latest revenue of RM 12 billion in FY2017, which is also the lowest revenue over the last 5 financial years.

In terms of net earnings, DRB-Hicom experienced a downward trend, from RM 1 billion in FY2013 to lost making in FY2016 and FY2017 at negative RM 822 million and negative RM 222 million respectively.

Net profit margin wise, DRB-Hicom was at 4.4% in FY2013 but had been making a loss since FY2016. Return of Equity wise DRB-Hicom is also in a downward trend from 8.1% in FY2013 to loss making in FY2016

On company’s debt, DRB-Hicom has a high debt to equity ratio at 1.30 and both current ratio and cash ratio are of below average values at 0.54 and 0.14 respectively.

DRB-Hicom pays a very low dividend yield of 0.38%.

In conclusion, DRB-Hicom is a large conglomerate facing great challenges in profit making due to the slowing down local economy. Due to its large business diversity in various sectors, the company’s performance is closely tied to the country’s entire economic wellbeing. Moving forward if the local economy picks up due to recovering oil prices, appreciating Ringgit and more optimistic economic outlook, the company’s profit may turn green accordingly, which can be seen by the company’s strong performance in 2Q of FY2018, having a positive earning of RM 736 million.

Next quarterly results announcement is expected to be in the month of Feb 2018.

News on DRB-Hicom Bhd

In January, DRB-Hicom announced that its subsidiary Proton Holdings has terminated its equity joint venture with China’s Goldstar Heavy Industrial (Goldstar) to produce and sell LOTUS cars in China. Additionally, the Lotus Group International has also issued a termination letter to Goldstar because Goldstar Lotus Automobile, had failed to obtain the required manufacturing license in China in time. However, the termination of the contract will have no material effect on the group’s earning, gearing and net assets for DRB-Hicom’s financial year ending 31 March 2018.

On a better perspective, the Proton-Geely acquisition may be DRB-Hicom’s positive prospect. According to The Star, Proton Holdings regained its popularity to the top of the car market via its strategic partnership with Chinese multinational automotive manufacturing company, Zhejiang Geely Holding Group (“Geely”) early this year. In September 2017, Geely had completed a 49.9% acquisition stake in Proton, which is a major milestone for Proton towards regaining its market leadership.

A big part of the deal with Geely involved rights for Proton to use Geely’s bestselling model – the Boyue sports utility vehicle (SUV) – to penetrate the regional market. The new Proton SUV is expected to be rolled out in the second half of this year. Most industry observers believe that the vehicle will be popular in Malaysia as it would rival other SUV such as Mazda CX-5 and Honda-CRV, which are priced over RM100,000.

iVolume Spread Analysis Weekly Chart & Comment – DRB-Hicom

DRB-Hicom have been in a strong uptrend based on 12 month weekly iVSAChart. iVSAChart have alerted the Buy Signal in earlier of November 2017. Smart Money continue to push up DRB-Hicom since the buy signal with the potential return of +50%.

The intention of Smart Money are detected with another Sign of Strength in the end of December 2017 before wide spread up bar on the following week. As for now, we will hold and ride DRB-Hicom until Sell Signal is detected by iVSAChart.

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