DRB-Hicom raises value of asset to be disposed by RM134m


DRB-Hicom Bhd has adjusted the value of its proposed asset disposal to Prisma Dimensi Sdn Bhd by up to RM134.14 million, under conditions that two events are to take place within the adjustment period of five years.

In an exchange filing yesterday, the conglomerate noted the conditions of the consideration adjustment are if the Glenmarie Golf and Country Club (GGCC) members’ approval is obtained and if Horsedale Development Bhd (HDB) or GGCC are to enter other agreements to sell the land within the period.

DRB-Hicom noted the justification for the additional consideration is backed by the inclusion of the redevelopment value for the GGCC land.

The estimated net gain on disposal will increase from RM849.4 million to RM983.54 million if the conditions are met. However, if none of the events occur, the estimated net gain will only increase to RM864.4 million.

In March, DRB-Hicom proposed to dispose of 10 property assets, 100% stake in Rebak Island Marina Bhd and 70.6% of HDB in exchange for a freehold land in Johor worth RM1.93 billion and RM288.7 million in cash.

DRB-Hicom’s share price closed higher yesterday, up 0.96% or two sen to RM2.10, amid news on a proposed collaboration between Malaysia and Indonesia to produce an Asean car.

Hong Leong Investment Bank Bhd (HLIB), in its research report on June 1, said DRB-Hicom is expected to remain dragged down by poor Proton sales in the near term prior to the launch of its first SUV Boyue model by end-2018.

The group’s earnings and cashflow are expected to be supported by the stable performance of Bank Muamalat Malaysia Bhd, Composite Technology Research Malaysia and Honda Malaysia Sdn Bhd.

HLIB has maintained its ‘Buy’ call on Proton with a reduced target price (TP) of RM2.50 from RM2.88.

Kenanga Research, in its report on the same date, however, upgraded DRB-Hicom to ‘Outperform’ on share price retracement and optimism on Proton’s strategic partnership with Zhejiang Geely Holding Group Co Ltd.

It expects Geely to facilitate Proton in terms of technology and, at the same time, assemble the four-wheel drive model Boyue.

Proton is in the middle of finalising its 10-year business plan targeting 30% market share locally and 10% regionally — with new models in the future that include expanding product portfolio in segments A, B, SUV and MPV for exports.

Kenanga lowered its TP for DRB-Hicom from RM2.50 to RM2.30, following the downgrade in target price for Pos Malaysia Bhd based on sumof-parts derived valuation.

The group noted the restructuring of Proton hitting its financial business, leading it to post a narrower net loss of RM10.27 million in the fourth quarter ended March 31, 2018 (4Q18), compared to a net loss of RM329.57 a year ago.

Revenue for the three months dropped 12% year-onyear to RM3.06 billion due to lower sales of Proton and other automotive makes.

The 4Q18 saw an improved performance by the group’s courier and logistics businesses under Pos Malaysia, and higher sales from Alam Flora Sdn Bhd.