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Thursday, November 09, 2006

Proton at 5 1/2-month high on govt nod for sale of 51% ops

Proton Holdings Bhd’s share price surged to a 5 1/2-month high of RM5.70, up 9.6% on Nov 9, as investors were optimistic about its outlook on news the government has approved a plan to allow 51% control of the manufacturing operations to foreign parties.

Proton opened at RM5.35, up 15 sen. Within the first hour of trade there were 899,200 shares done at prices ranging from RM5.35 to RM5.70.

At 10am, it was up 35 sen or 6.7% to RM5.55.

The Edge FinancialDaily reported the government is believed to have finally decided on giving foreign parties 51% control in the national carmaker’s manufacturing operations, with German carmaker Volkswagen AG (VW) being mentioned as a potential partner.

Negotiations have resumed with Volkswagen AG as of last month for it to come into the picture. Proton and the German carmaker ended talks early this year after they failed to agree on issues such as control of the company, a source said.

According to the source, the government is agreeable to a model that would be similar to the arrangement between second national carmaker Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and its principal Daihatsu Motor Co Ltd of Japan.

OSK Investment Research said it had upgraded its call on Proton from “Neutral” to a “Trading Buy” with target price at 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).

“This recent development with VW is certain to provide an impetus for trading on the shares. We expect that the scheme is similar to Daihatsu/Perodua arrangement and VW will assume control of the manufacturing arm.

“As for the equity sale, we believe that Khazanah (Nasional Bhd) would want to keep Proton nationalised. Thus, should they decide to sell, it would most likely to be to a local party(s),” it said.


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What is the main factor for you to buy a Proton Car?
Low price and no other choice due to budget
Good resale value
Low maintenance cost
Ride & Handling is good
Reliable parts, chasis and engine
Good Styling exterior & Interior
Patriotism (I support Made in Malaysia Products)
Follow others (Follow Majorities should be the best choice)