We attended a sneak peek of the Proton e.MAS 7 as part of an EV tour organised by DRBHCOM which also featured Audi and SMART EV models. The indicative price of the e.MAS 7 is at RM120k, competitively priced against the BYD Atto and Neta X. The sales volume will be insignificant during our forecast period. Although we did not get to test drive the first national EV, we had a taste of other EV models distributed by DRBHICOM which provided a good gauge of what to expect in new EV models. We maintain our forecasts, TP of RM1.30 and OUTPERFORM call.

With a name like e.MAS 7, we had high hopes of test driving to see if it could potentially be the next golden goose for Proton. The expectation would have been high considering this is our first national EV.

Although we were disappointed that we would have to wait for the official launch in December before we could get the full experience, we were treated to an up close and personal look at the Proton e.MAS 7 (refer to Exhibits 1 and 2) as well as driving SMART and AUDI EVs models (refer to Exhibit 3) from EON Glenmarie to Bangi. While a short 40km ride does not give justice to what the cars can do, it does provide a tantalizing indication of how our first national EV would perform.

Set to be launched this coming December, the Proton e.MAS 7 is to be competitively priced from RM120k, against its closest competitors with closest built in the SUV segment such as the BYD Atto (RM149k) and Neta X (up to RM135k). The base Prime model comes with a 49.5 kWh battery (345km of WLTP range) while, the Premium gets a 60.2 kWh battery (410km WLTP range). For charging, the max DC rate is 80 kW for the Prime and 100 kW for the Premium, while AC charging is 11 kW max for both. Proton claims that the DC fast charging takes just 20 minutes from 30% to 80% SoC, while AC charging refills the smaller battery in 4.9 hours, or 6.1 hours for the Premium.

While Proton has long benefitted from Geely's technology since the latter's entry in 2017, Proton emphasised that the new national EV model, based on Geely's Galaxy E5, is the product of collaboration between the two companies, involving 230 Proton engineers and designers. The interior is comfortable enough to fit a 6-footer with ample rear passenger room while its indigo blue trims and panoramic sunroof give it a classy and clean look. Tech-wise, its host of features (including a colour head-up display, 16-speaker sound system, ventilated front seats, all in the Premium version, and walk-away auto lock) matching those of other brand EVs. But with muscle memory kicking in, we started with the power windows button - a smooth and quiet glide, not bad at all for the first national EV. Overall, it is an attractive package.

We estimated an order target of 3k units (estimated market share of 30% based on 10k EV units sold last year) by end-2024 for Proton e.MAS 7 (CBU) with the first delivery in January 2025. We believe this is achievable given that it already secured more than 100 bookings since 26 October 2024 which is not an easy feat given its digital platform booking with no test drive, no official pricing nor official specification released. This reflects Proton's strong market base as well as brand loyalty among local fanboys and government support on national automakers. It plans for local production in 2026.

Impact on earnings. We estimate that the earnings impact of the latest development is negligible at <5%.

The new distributorship requires minimum capex as it utilises existing EON dealerships (currently, there are 34 EON dealerships, with its biggest EON Glenmarie already secured 60 Proton e.MAS 7 bookings). Given the crowded EV market with various new EV launches (refer to Exhibit 4), we believe that Proton will need to expedite its CKD local production of the e.MAS 7 to be competitively priced and stand out among a multitude of names, especially against the upcoming Perodua EV model which expected to be priced below RM100k.

Forecasts. Maintained.

Valuations. We also maintain our Sum-of-Parts (SoP)-derived TP of RM1.30 (see Page 2). There is no adjustment to our TP based on ESG given a 3-star rating as appraised by us (see Page 5).

Investment case. We like DRBHCOM for: (i) being the second largest player in the local automotive sector, second only to Perodua, with a market share of about 30%, (ii) its strong Proton and Honda franchises, and (iii) its improving banking franchise under Bank Muamalat. Maintain OUTPERFORM.

Risks to our call include: (i) consumers cutting back on discretionary spending (particularly big-ticket items like new cars) amidst high inflation, (ii) persistent disruptions (including chip shortages) in the global automotive supply chain, (iii) a slowdown in capital market activities (Bank Muamalat), and (iv) a global recession hurting the demand for transport and aviation services.

Source: Kenanga Research - 5 Nov 2024