Journey to Wealth
DRB-Hicom - Proton buys Petronas engine technologies BUY
- It was reported in the press yesterday that DRB-Hicom's Proton has signed an agreement to buy all engine technologies and knowledge developed by Petronas since 1997 at RM63mil.
- Proton will have immediate ownership of a more powerful yet fuel-efficient, naturally aspirated and turbocharged 2.0 litre- and 2.2 litre-engines. To be exact, Proton is taking over seven engine technologies with 117 technology patents from Petronas.
- To recap, Petronas in 1997 had begun developing Malaysia's first commercial engine project called the Petronas E01. This was a collaboration between Petronas engineers and development partners as a result of the former's involvement in Formula 1.
- In fact, back in 2006, Proton had signed an MoI with Petronas to develop larger capacity engines and with a view to explore the development of Petronas engines for mass production and for these engines to be fitted into Proton's models. The plan was to use them for Proton's 1.8-2.2 litre range but this did not materialise.
- Management had indicated that the updated version of the engine is currently being tested in Proton Exora and Preve models and it is looking at rolling out new Proton models fitted with engines developed by Petronas in 1Q2013.
- We are not ruling out the possibility of this engine being fitted into Proton's models in the pipeline, namely Preve hatchback and Exora facelift model.
- Apart from good value for more-than-decent engine technology, E01 engine produces similar power to Honda K20A performance standards. There will be additional income for DRB given that Petronas had earlier signed a deal with China's Nanjing automobile to start mass production of the NE01 engines in 3Q2013. However, details are sketchy at this juncture.
- We reaffirm our BUY rating on DRB-Hicom, but with our fair value and estimates placed under review.
Source: AmeSecurities
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Discussions
Be the first to like this. Showing 3 of 3 comments
i m sure they have made some progress since then...petronas already developed 7 new engines up until 2010..for all we know..they already have a similar capable small size engine that maximise fuel efficiency..once proton take over,the development will naturally continue as m sure they will retain key staffs along with the company n beef up with lotus trained engineers. But the prize i think is the china deal.
2012-12-13 02:09
Drbhicom will be expanding with their new 'arsenals';the powerband of these EO1 engines are great ....but where it fits matters most!
2012-12-13 06:39
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
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Will a 25 year technolgy (developed in 1997) put to use will meets current demands?Many renowned compnaies,ford,peugeot opted for high efficient high compression smaller engine to minimoze cost and maximizes fuel efficiencies.One good example is ford's1.1 ecoboost engine developing good 125 hp and latest, honda 1.6 churning 250hp,peugeot 308 and its variants within 1.6 cc.range.
2012-12-12 20:57