04-12-2007: Proton up on turnaround
KUALA LUMPUR: Proton Holdings Bhd’s share price rose as much as 22 sen or 6.1% to RM3.82 in intra-day trade yesterday as investors expected it to be able to turn around with new models and improvements in operations.
The share price closed 14 sen higher at RM3.74. There were 4.78 million shares transacted at prices ranging from RM3.62 to RM3.82.
Last Friday, the national carmaker reported its first profit — RM3.51 million in the second quarter ended Sept 30, 2007 — after five consecutive quarters of net losses, citing improved sales and better cost management.
The share price was recently sold down after investors were disappointed the government, had on Nov 20, decided to call off negotiations with Volkswagen. Affin Investment Bank Research maintained its buy on Proton with an unchanged target price of RM6.40, based on price over net tangible assets of 0.7 times.
“We believe the second quarter ended Sept 30, 2007 (2Q for financial year ending March 30, 2008) will mark a turnaround milestone in Proton’s operations. We are reducing our net loss forecast for FY08 by 63% to RM27 million from RM73 million net loss previously.
“Although the potential strategic alliance with either Volkswagen or General Motors has been called off, we believe Proton will still be able to turn around with the continuous launch of new models, improving cost efficiency, penetration into new markets and vendor consolidations,” it said.
It said Proton’s 2Q08 results has improved significantly from a net loss of RM47 million in 1Q08 to a net profit of RM3.5 million, mainly due to higher sales volume as well as sales of higher margin products such as the Persona versus Gen 2.
Proton’s 2Q08 sales volume has also improved by 50% quarter-on-quarter and 16% year-on-year (from 23,000 units per quarter in 1Q08 and 31,000 units per quarter in 2Q07 to 36,000 units per quarter in 2Q08).
“We believe the outlook for 2HFY08 would be better as sales will be lifted by new models (Persona and BLM), facelift of current models to sport edition (Gen 2 and Savvy) and penetration into the Chinese market with Gen 2 to be rebranded under Europestar brandname,” it said.
However, AmResearch was more cautious as Proton was still loss-making operationally. It said the 2Q earnings included a write-back from previous year’s development cost amounting to RM46 million and gain on land disposal of RM6.6 million.
“Stripping these two items out, Proton would have made a net loss of RM49 million,” it said.
On a bright note, Proton’s sales volume showed a recovering trend the past few months. In October, Proton sold 13,226 vehicles, the highest since December 2005 and up 41% on-year.
“The sales volume is just slightly below Perodua’s 13,513 units. As a result, domestic sales volume for 2Q were 35,506, as opposed to 23,753 in 1Q. Sales volume for the first six months were 59,259, up 1% from a year ago,” it said.
Proton’s sales volume level is set to sustain in the next few months in view of the new Persona model launched in mid-August, it said. It said the Persona attracted about 23,000 bookings to date. Coupled with the Iswara replacement due January 2008, Proton was likely to gradually regain market share from Perodua.
“We are reviewing our target price following the collapse in the proposed strategic partnership with VW. Our target price of RM5.50 previously took into consideration that VW would assist in Proton’s long term recovery and lend credence to Proton’s branding,” it said.
The share price closed 14 sen higher at RM3.74. There were 4.78 million shares transacted at prices ranging from RM3.62 to RM3.82.
Last Friday, the national carmaker reported its first profit — RM3.51 million in the second quarter ended Sept 30, 2007 — after five consecutive quarters of net losses, citing improved sales and better cost management.
The share price was recently sold down after investors were disappointed the government, had on Nov 20, decided to call off negotiations with Volkswagen. Affin Investment Bank Research maintained its buy on Proton with an unchanged target price of RM6.40, based on price over net tangible assets of 0.7 times.
“We believe the second quarter ended Sept 30, 2007 (2Q for financial year ending March 30, 2008) will mark a turnaround milestone in Proton’s operations. We are reducing our net loss forecast for FY08 by 63% to RM27 million from RM73 million net loss previously.
“Although the potential strategic alliance with either Volkswagen or General Motors has been called off, we believe Proton will still be able to turn around with the continuous launch of new models, improving cost efficiency, penetration into new markets and vendor consolidations,” it said.
It said Proton’s 2Q08 results has improved significantly from a net loss of RM47 million in 1Q08 to a net profit of RM3.5 million, mainly due to higher sales volume as well as sales of higher margin products such as the Persona versus Gen 2.
Proton’s 2Q08 sales volume has also improved by 50% quarter-on-quarter and 16% year-on-year (from 23,000 units per quarter in 1Q08 and 31,000 units per quarter in 2Q07 to 36,000 units per quarter in 2Q08).
“We believe the outlook for 2HFY08 would be better as sales will be lifted by new models (Persona and BLM), facelift of current models to sport edition (Gen 2 and Savvy) and penetration into the Chinese market with Gen 2 to be rebranded under Europestar brandname,” it said.
However, AmResearch was more cautious as Proton was still loss-making operationally. It said the 2Q earnings included a write-back from previous year’s development cost amounting to RM46 million and gain on land disposal of RM6.6 million.
“Stripping these two items out, Proton would have made a net loss of RM49 million,” it said.
On a bright note, Proton’s sales volume showed a recovering trend the past few months. In October, Proton sold 13,226 vehicles, the highest since December 2005 and up 41% on-year.
“The sales volume is just slightly below Perodua’s 13,513 units. As a result, domestic sales volume for 2Q were 35,506, as opposed to 23,753 in 1Q. Sales volume for the first six months were 59,259, up 1% from a year ago,” it said.
Proton’s sales volume level is set to sustain in the next few months in view of the new Persona model launched in mid-August, it said. It said the Persona attracted about 23,000 bookings to date. Coupled with the Iswara replacement due January 2008, Proton was likely to gradually regain market share from Perodua.
“We are reviewing our target price following the collapse in the proposed strategic partnership with VW. Our target price of RM5.50 previously took into consideration that VW would assist in Proton’s long term recovery and lend credence to Proton’s branding,” it said.
posted by SEE FU at 2:05 PM
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