KUALA LUMPUR, Aug 29 2018 : RHB Research Institute has maintained its “buy” recommendation on DRB-HICOM Bhd, with a higher target price of RM2.92 per share.
“We remain positive over Proton’s turnaround prospects, beginning with the launch of the Proton SUV, while various attractive embedded assets within DRB also provide significant value-accretion potential, in our view.
“We make no changes to our forecasts as we believe DRB remains on track to achieve our earnings estimates,” the research house said in a note today.
RHB Research also believed that DRB-HICOM’s second quarter results would be driven by a higher car sales volume from the two tax holiday months.
“However, we are cautious over some degree of margin compression in the period after September, post-the Sales and Services Tax, and if the market weakens enough to the point that brands are compelled to offer discounts,” it said.
The Malaysian Automotive Association’s July data showed DRB-related brands reporting a sales volume of 25,284 units, a 47.9 per cent hike year-on-year.
RHB Research said key risks to its call and target price on DRB-HICOM include worsening consumer sentiment, delays in new model launches and regulatory risks related to the mooted third national car project.
As at 9.58 am, DRB-HICOM’s shares on Bursa Malaysia rose two sen to RM2.27 with 1.66 million shares changing hands. – Bernama