PM: VW may buy into Proton manufacturing
Prime Minister Datuk Seri Abdullah Ahmad Badawi said on Nov 9 that the government is considering giving approval for German carmaker Volkswagen AG (VW) to take up a 51% controlling stake in Proton Holdings Bhd's manufacturing operations.
“It is an option we are considering at the moment,” he said, adding that a decision would be made after considering the options.
Abdullah was commenting on a report in the FinancialDaily on Nov 9 that the government had finally decided on giving foreign parties 51% control in the manufacturing operations of Proton with Volkswagen as a potential partner.
He was speaking to reporters after launching the Universiti Malaya Royal Professor Ungku Aziz Chair and centre for poverty and development studies in Kuala Lumpur.
Research houses, meanwhile, are considering making an upward re-rating of Proton following the latest government move to consider giving approval to foreign parties to take control of the the manufacturing arm. Proton closed 30 sen higher at RM5.50 after touching a high of RM5.70 with 1.92 million shares done.
On Nov 9, the FinancialDaily reported that the decision to bring in a foreign partner to Proton was made in mid-October at a meeting on the automotive industry chaired by Abdullah.
The report said negotiations had resumed with Volkswagen in October after talks between Proton and the German carmaker failed earlier this year over issues such as control of the national carmaker.
Two senior officials from Volkswagen had met with Second Finance Minister Tan Sri Nor Mohamed Yakcop to discuss the matter including the equity structure, vendor system and product development. Volkswagen is expected to come back with a complete proposal.
The report said the government was agreeable to a model similar to the arrangement adopted by Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and Japan’s Daihatsu Motor Co Ltd. Using that arrangement, Proton would retain control over the domestic distribution arm but the manufacturing arm would be headed by a foreign partner.
The report added it was now up to Khazanah Nasional Bhd to decide whether to sell its majority stake in Proton to local players such as Sime Darby Bhd or DRB-Hicom Bhd to drive further negotiation with their respective foreign partners.
A Proton official, when contacted, said the company’s management was unaware and had no knowledge of the government’s decision.
“If there is any decision, it is a shareholder’s matter,” the official said.
OSK Investment Research has upgraded Proton to a 'trading buy' call from neutral with a target price of RM7 per share based on 0.7 times FY08 book value versus 1.0 times for Kia Motor and Hyundai and 0.8 times for PSA Peugeot Citroen.
CIMB Investment Research and Mayban Securities Research said they would revise their fair value and call on Proton if the government approves the sale to Volkswagen.
“Proton could ride on VW’s stronger brand name, access the latter’s far superior technology and benefit from a significantly wider sales and parts sourcing network,” CIMB Research said, adding it valued Proton at 0.9 times CY07 net tangible assets at a target price of RM9.20.
It said such a move would be positive for Proton as Volkswagen would likely use the former’s plant in Tanjung Malim as its production base for the Asean passenger car market.
CIMB Research added Proton would likely develop new car models with Volkswagen for specific segments and markets.
Mayban Research said Volkswagen would be more pliant in negotiations this time around as it could use Proton as a platform to penetrate the Asean market to counter its slower sales recorded in North America and Europe.
“It is an option we are considering at the moment,” he said, adding that a decision would be made after considering the options.
Abdullah was commenting on a report in the FinancialDaily on Nov 9 that the government had finally decided on giving foreign parties 51% control in the manufacturing operations of Proton with Volkswagen as a potential partner.
He was speaking to reporters after launching the Universiti Malaya Royal Professor Ungku Aziz Chair and centre for poverty and development studies in Kuala Lumpur.
Research houses, meanwhile, are considering making an upward re-rating of Proton following the latest government move to consider giving approval to foreign parties to take control of the the manufacturing arm. Proton closed 30 sen higher at RM5.50 after touching a high of RM5.70 with 1.92 million shares done.
On Nov 9, the FinancialDaily reported that the decision to bring in a foreign partner to Proton was made in mid-October at a meeting on the automotive industry chaired by Abdullah.
The report said negotiations had resumed with Volkswagen in October after talks between Proton and the German carmaker failed earlier this year over issues such as control of the national carmaker.
Two senior officials from Volkswagen had met with Second Finance Minister Tan Sri Nor Mohamed Yakcop to discuss the matter including the equity structure, vendor system and product development. Volkswagen is expected to come back with a complete proposal.
The report said the government was agreeable to a model similar to the arrangement adopted by Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and Japan’s Daihatsu Motor Co Ltd. Using that arrangement, Proton would retain control over the domestic distribution arm but the manufacturing arm would be headed by a foreign partner.
The report added it was now up to Khazanah Nasional Bhd to decide whether to sell its majority stake in Proton to local players such as Sime Darby Bhd or DRB-Hicom Bhd to drive further negotiation with their respective foreign partners.
A Proton official, when contacted, said the company’s management was unaware and had no knowledge of the government’s decision.
“If there is any decision, it is a shareholder’s matter,” the official said.
OSK Investment Research has upgraded Proton to a 'trading buy' call from neutral with a target price of RM7 per share based on 0.7 times FY08 book value versus 1.0 times for Kia Motor and Hyundai and 0.8 times for PSA Peugeot Citroen.
CIMB Investment Research and Mayban Securities Research said they would revise their fair value and call on Proton if the government approves the sale to Volkswagen.
“Proton could ride on VW’s stronger brand name, access the latter’s far superior technology and benefit from a significantly wider sales and parts sourcing network,” CIMB Research said, adding it valued Proton at 0.9 times CY07 net tangible assets at a target price of RM9.20.
It said such a move would be positive for Proton as Volkswagen would likely use the former’s plant in Tanjung Malim as its production base for the Asean passenger car market.
CIMB Research added Proton would likely develop new car models with Volkswagen for specific segments and markets.
Mayban Research said Volkswagen would be more pliant in negotiations this time around as it could use Proton as a platform to penetrate the Asean market to counter its slower sales recorded in North America and Europe.
posted by SEE FU at 9:49 AM
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