They said the higher sales volume of Proton’s Persona and new Saga models in the domestic market indicated that local buyers were placing greater trust in the carmaker, and this could help bring the company back to profitability.
TA Research Securities analyst Ikmal Hafizi said with its quality issues finally resolved and the domestic demand improving, Proton was on the right track.
“We have factored in a conservative sales number for 4QFY08, with the launch of the new Saga. Now that the positive indication is heading beyond the scale, we are more comfortable to raise our Saga sales number in FY08 and FY09.”
“Persona will continue to be hot with average sales in excess of 4,500 units per month in the same period,” he said.
Ikmal said given that Saga and Persona were the top two fattest margin contributors in the revenue mix, the company’s operating margin was expected to increase going forward.
“Accordingly, our FY08 net profit is estimated to go into the black with a net income of RM19.3 million. However, core net profit remains RM53.2 million in the red.”
“For FY09, we estimate the company to land safely on the dry by RM214.8 million in net profit,” he said.
Ikmal said TA Research had upgraded its recommendation on Proton to a buy at RM4.12 with a target price of RM5.10 from hold previously, adding that its valuation was based on price-to-book giving it a 0.53 times multiple against its CY08 book value.
“Previously, our valuation had a discount of 50% from the industry average, but given the earnings momentum contributed by Persona in the current quarter and the better-than-expected bookings of Saga so far, we have attached a lower discount of 40%,” he said.
Meanwhile, SJ Securities Sdn Bhd maintained a neutral on Proton with a fair value of RM5.50, pegging it at a price to net tangible assets of 0.6 times.
“The first step, which is to achieve better sales volume with the release of its two appealing models, is right on track. Coupled with its foray into the export market in China and the Middle East, Proton is improving on a much quicker level than most would expect.