03-08-2007: Mixed views on Proton’s Persona
KUALA LUMPUR: Proton Holdings Bhd’s soon-to-be-launched 1.6-litre Wira replacement model (WRM), to be named Persona, has received mixed reviews from analysts following an analyst briefing and preview of two new models by Proton.
Persona is slated to be launched on Aug 15. The other new model is a 1.3-litre sedan to replace Iswara, and will be launched in January 2008, according to analyst reports.
Hwang-DBS Vickers Research is upbeat on the upcoming Persona. It said Persona would be priced at between RM45,000 and RM55,000, and that Proton targeted to sell about 4,000 units per month.
That would translate into RM1.4 billion and RM2.4 billion in revenue in the financial year ending March 31, 2008 (FY08) and FY09, respectively, it said in a research note yesterday.
“This has prompted us to narrow the potential losses for Proton to RM114 million and RM52 million (from RM400 million and RM330 million losses previously) for those years.
“The WRM, built on Gen.2 platform (with jigs and tooling mostly amortised and provisions already made in previous year’s P&L) is expected to rake in high 15% to 20% gross margins,” it said.
The attractive pricing strategy and the right timing, coupled with a possible warranty of up to five years, could help Proton meet its targeted monthly sales of 4,000 units, it added.
It added that Persona was designed based on buyers’ preferences and suggestions, and was moulded after the Gen.2 that was the third best selling model for Proton.
On the Iswara replacement model, Hwang-DBS Vickers said it remained cautious of the success of the model, which would be built on the Savvy platform. “Functionality is the key selling point. If the group can price the car at below RM30,000, then it might be able to tap into the first-time buyer market,” it said.
The research house reiterated its “fully valued call” on Proton with a target price of RM5.50, based on 30% discount to its realised net asset value (RNAV) of RM8.11.
“Despite our lower loss projections, our call takes into consideration the company’s questionable longer term viability and competitive operating landscape,” it said.
Meanwhile, RHB Research Institute said it was “less optimistic” on the Persona’s sales target in view of the public perception on its quality issues.
It said the pessimism also stemmed from the upcoming release of the new Toyota Vios in October to be priced around RM70,000, as well as weak car sales and unfavourable hire purchase credit environment.
“Thus we believe Proton can sell 2,000 to 2,500 Persona per month and will monitor to see if the management’s target of 4,000 per month is achievable and sustainable over the longer term,” it said.
Last month, Proton said it would supply cars to China’s Jinhua Youngman Automobile Manufacturing Co (JYA).
RHB Research said Proton targeted to export 30,000 completely built-ups (CBUs) of Gen.2 cars, which would be rebranded as Europestar for the China market, over a period of 20 months beginning November 2007.
It said Proton was currently in talks with JYA to assemble completely knocked-downs (CKDs) in two JYA’s plants in China.
It said the annual potential earnings Proton expected to realise from the alliance were licensing fee of RM35 million and royalty of RM102 million for every 150,000 units, parts supply revenue of RM3.1 billion and royalty fee of RM78 million for parts localisation, lotus engineering services of RM195 million and trademark usage fees of RM36 million.
“Given the potential teething problem and execution risks, we have refrained from raising our earnings forecast at this point of time,” it added.
RHB Research, noting the drag on the talks between Volkswagen and Proton, has maintained its “trading buy” recommendation on Proton with an indicative fair value of RM8.60.
Persona is slated to be launched on Aug 15. The other new model is a 1.3-litre sedan to replace Iswara, and will be launched in January 2008, according to analyst reports.
Hwang-DBS Vickers Research is upbeat on the upcoming Persona. It said Persona would be priced at between RM45,000 and RM55,000, and that Proton targeted to sell about 4,000 units per month.
That would translate into RM1.4 billion and RM2.4 billion in revenue in the financial year ending March 31, 2008 (FY08) and FY09, respectively, it said in a research note yesterday.
“This has prompted us to narrow the potential losses for Proton to RM114 million and RM52 million (from RM400 million and RM330 million losses previously) for those years.
“The WRM, built on Gen.2 platform (with jigs and tooling mostly amortised and provisions already made in previous year’s P&L) is expected to rake in high 15% to 20% gross margins,” it said.
The attractive pricing strategy and the right timing, coupled with a possible warranty of up to five years, could help Proton meet its targeted monthly sales of 4,000 units, it added.
It added that Persona was designed based on buyers’ preferences and suggestions, and was moulded after the Gen.2 that was the third best selling model for Proton.
On the Iswara replacement model, Hwang-DBS Vickers said it remained cautious of the success of the model, which would be built on the Savvy platform. “Functionality is the key selling point. If the group can price the car at below RM30,000, then it might be able to tap into the first-time buyer market,” it said.
The research house reiterated its “fully valued call” on Proton with a target price of RM5.50, based on 30% discount to its realised net asset value (RNAV) of RM8.11.
“Despite our lower loss projections, our call takes into consideration the company’s questionable longer term viability and competitive operating landscape,” it said.
Meanwhile, RHB Research Institute said it was “less optimistic” on the Persona’s sales target in view of the public perception on its quality issues.
It said the pessimism also stemmed from the upcoming release of the new Toyota Vios in October to be priced around RM70,000, as well as weak car sales and unfavourable hire purchase credit environment.
“Thus we believe Proton can sell 2,000 to 2,500 Persona per month and will monitor to see if the management’s target of 4,000 per month is achievable and sustainable over the longer term,” it said.
Last month, Proton said it would supply cars to China’s Jinhua Youngman Automobile Manufacturing Co (JYA).
RHB Research said Proton targeted to export 30,000 completely built-ups (CBUs) of Gen.2 cars, which would be rebranded as Europestar for the China market, over a period of 20 months beginning November 2007.
It said Proton was currently in talks with JYA to assemble completely knocked-downs (CKDs) in two JYA’s plants in China.
It said the annual potential earnings Proton expected to realise from the alliance were licensing fee of RM35 million and royalty of RM102 million for every 150,000 units, parts supply revenue of RM3.1 billion and royalty fee of RM78 million for parts localisation, lotus engineering services of RM195 million and trademark usage fees of RM36 million.
“Given the potential teething problem and execution risks, we have refrained from raising our earnings forecast at this point of time,” it added.
RHB Research, noting the drag on the talks between Volkswagen and Proton, has maintained its “trading buy” recommendation on Proton with an indicative fair value of RM8.60.
posted by SEE FU at 6:45 AM
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