DRBHicom: Proton inking of a non exclusive collaborative agreement with Honda Japan to explore opportunities in platform sharing and product development looks to be a preclude to a deeper relationship with Honda in addition to other foreign partners.

DRBHicom’s priority right now (Oct 2012) is to get the utilization rate at Proton up as fast as possible with minimum development cost, ie. Rolling out new models using its foreign partner’s platform. However, the Honda agreement is non exclusive and Proton will be free to work with any other partner in the future. The main agenda is to ramp up Proton’s utilization rate, currently (Oct 2012) at 41% and the fastest way to do this is to work with multiple foreign players.

Using common platforms from the likes of Honda and perhaps VW in the future will not only reduce costs but also bump up the quality and brand perception of Proton cars.

Overall, news as DRBHicom’s decision to work with multiple parties could be hard to do over the long term. It is also too early to calculate the impact on the bottom line.

From Honda’s perspetive, Honda could be using this opportunities to squarer off against Toyota which is dominant in Malaysiabecause of its relationship with UMW and Proton. DRBHicom’s current (Oct 2012) relationship with Honda is limited to its 34% associate stake in Honda Malaysia.

MISC: MISC is 62.7% owned by Petronas. With Petronas on the helm, MISC is more or less confirmed the shipping portion of Petronas’s endeavors, be it crude oil, LNG or refined petroleum products, which ensures the shipping outfit profits even in the most distressed of times.

For its nine months ended Sept 2011, MISC suffered a net loss of rm1.48 billion. Much of it was attributed to rm1.74 billion in impairments associated with MISC exiting the container shipping business. Then for the first quarter March 31 2012 the shipping company bled net losses of rm465 million.

It is taking advantage of the current industry downtrend (Oct 2012) to acquire distressed assets, as it acquired AET Tankers Holdings Sdn Bhd for US$445 million in 2003. It has been in talks, in the shipping as well as oil and gas segments, but none have materialized.

MISC as at end June 2012 was sitting on cash and cash equivalents of rm3.98 billion and long term interest bearing loans and borrowings of rm11.39 billion while the company’s long term debt is moderately in excess of rm3 billion..

Its strong asset base could be one of the reasons for MISC’s rapid recovery from the downturn and the company exiting non core businesses such as container shipping.

Despite of it selling its loss making container ships, MISC still has plenty of assets left, both shipping and oil and gas related. Among the jewels in MISC’s crown is AET, with a fleet of about 80 or so ships, plying intl waters with a strong presence in the US.

Other than AET, another key asset is MISC’s 66.5% stake in oil and gas fabricator MMHE or MHB. With parent Petronas at the helm of MISC, MHB seems likely to benefit from the spending on oil and gas. It is the largest local fabricator with a 280.6ha yard and a 51% market share of the annual fabrication capacity.

Though MHB’s main focus is offshore, the company is eyeing a slice of Petronas’ US$20 billion refinery and petrochemical integrated development (RAPID) project. It is focusing on construction of structures. Such contracts from Petronas could be a boon to MHB, which has a current (Oct 2012) order book of about rm2.8 billion.

Another asset in MISC’s stable is its 15.7% stake in container port operator NCB. Considering the shipping company has sold its container ships, there could be a push to divest its 15.7% stake in NCB. MISC’s top brass has denied any plans to sell its stake in NCB.

However, if market talk is to be believed, Tan Sri Syed Mokhtar could be eyeing MCB, which could provide MISC with an easy exit.