KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB Research) remains positive on DRB-HICOM Bhd's long-term outlook on potential growth driven by Proton Holdings Bhd's subsidiaries.
HLIB Research said the management is aiming to exceed 160,000 unit sales this year, compared to 151,000 units including exports in 2023.
"As of the first four months of 2024, Proton has sold 50,200 units, slightly behind its target.
"However, management remains optimistic about achieving stronger sales as various strategies are being implemented.
"Proton has recently introduced the updated X50 RC with attractive discounts and plans to launch a facelifted X70 soon, along with a new electric vehicle (EV) model by the end of the year," it said.
HLIB Research said Proton is developing a new Global Modular Architecture (GMA) platform for its upcoming five new next-generation models, including ICE, PHEV, and BEV, aiming for an annual production of 200,000 units.
"To support future growth into next-generation models, Proton has been engaging with its supply chain vendors to invest in new technologies and reduce costs," it noted.
Furthermore, HLIB Research said Bank Muamalat Malaysia Bhd's consistent improvement, driven by an expanding customer base, is contributing positively to the group.
Management is considering various strategies, including initial public offering (IPO) and merger and acquisition (M&A) activities, to reduce the group's effective stake to the 40 per cent cap mandated by Bank Negara Malaysia (BNM).
HLIB Research maintains a 'Buy' call on DRB-HICOM with an unchanged target price of RM1.65.
"While we remain positive about DRB's long term outlook, we are seeing increasing market competition take place.
"While the outlook seems pedestrian, alongside its results shortfall, we reckon that valuations are compelling at 8.4x/4.8x financial year 2024 and 2025 (FY24/25) price-to-earnings