Changes at Proton

KUALA LUMPUR: Proton Holdings Bhd is expected to see some major changes to its board, possibly involving the managing director’s position as well.

Sources say that several new appointments are likely to be made to the board. Among the names that have cropped up are Tan Sri Ab Rahman Omar and Datuk Abdul Razak Dawood, both of whom were previously with Edaran Otomobil Nasional Bhd (EON).

It is learnt that managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir may leave when his contract expires at the end of next month. Syed Zainal has helmed Proton since January 2006 and has been instrumental in charting the path for the national carmaker in the past two years when a much talked about partnership with Volkswagen AG fell through at the end of last year.

It is said that Ab Rahman may play a more prominent role in the national auto company, considering his years of experience in the industry.

Previously, Ab Rahman was an executive director of conglomerate DRB-Hicom Bhd from February 2006 but left his executive position and was made a non-executive director in December last year. He stepped down from the board in mid-July this year.

Prior to joining the board of DRB-Hicom in December 2005, Ab Rahman was the managing director of Perusahaan Otomobil Kedua Sdn Bhd (Perodua) from May 1996 to April 2004.

He was also a director of Proton from 1991 to 1996 and sat on the board of EON from 1989 to 1996, and was the chairman of the auto distributor from February 2006 to July this year.

Abdul Razak, meanwhile, could be heading Proton’s international operations, says a source.

He was among the pioneers at EON having joined in August 1984 following a stint at the UMW Group. At EON, Abdul Razak was also the general manager of Proton business in mid-2005.

There were quite a few changes on the Proton board and in its senior management in April this year. Among the more prominent names that left were director of manufacturing Datuk Kamarulzaman Darus, and head of engineering Abdul Wahab Mohd Mohamed Khalid.

There were three resignations from the board, albeit all non-executive positions, from November last year. Datuk Mohd Izzaddin Idris left that month, followed by Datuk Ahmad Hashim in February and Mohamad Zainal Shaari two months later.

So far, only one appointment has been made — that of Datuk Zalekha Hassan, who was the deputy secretary- general of the finance ministry. She was appointed in February to replace Datuk Ahmad Hashim.

Khazanah Nasional is the single largest shareholder in Proton with a 42.7% stake but has only one board representative in chairman Datuk Azlan Mohamed. Previously, Khazanah had up to three representatives on Proton’s board, including Azlan.

15-04-2008: Slew of resignations at Proton?

KUALA LUMPUR: There could be a slew of resignations from the top management echelons of national automaker Proton Holdings Bhd, industry sources said.

As at press time, the number, albeit unsubstantiated, stands at about nine and include such big wigs as director of manufacturing Datuk Kamarulzaman Darus (above right) and head of engineering Abdul Wahab Mohamed Khalid (above left).

When contacted, Proton yesterday confirmed that both Kamarulzaman and Abdul Wahab were leaving and it had also appointed Vimala Menon as director of finance and corporate affairs division. Menon was previously executive director of finance and corporate services of auto distributor Edaran Otomobil Nasional Bhd.

“Appointments and resignations of senior level personnel are a common occurrence in any organisation. After more than two decades with Proton, both Kamarulzaman and Tuan Haji Abdul Wahab Khalid have decided to pursue new opportunities and challenges outside the group.

“Proton has also appointed Vimala Menon, previously from EON, as director of the finance and corporate affairs division.

“Proton is confident that Vimala Menon, who brings with her more than 20 years of experience in the automotive industry, will strengthen Proton moving forward,” Proton managing director Datuk Syed Zainal Abidin Mohamed Tahir said in a statement yesterday, in response to queries from The Edge Financial Daily.

Syed Zainal made no mention of any others who may be leaving the company. The crucial question now is how quickly will Proton be able to fill the void left by the departures of the key personnel before it leaves a major dent on its operations.

It is no secret that Proton had faced difficulties in replacing its former chief executive officer Tengku Tan Sri Mahaleel Tengku Ariff, who went on leave in June 2005, but only officially left in September the same year.

The appointment of Syed Zainal happened only at end-November 2005, and according to industry players several other candidates had declined to take over the helm of the ailing automaker.

“It was perceived pretty much as getting on board a sinking ship back then… This time around, the head of engineering position, especially, will be hard to fill in,” an industry player said.

It is also noteworthy that there have been three resignations from the board, albeit all non-executive positions, since last November.

Early this month, Mohamad Zainal Shaari resigned from the board while Datuk Ahmad Hashim left in February this year. Datuk Mohd Izzaddin Idris resigned in November.

So far only one appointment has been made, that of Datuk Zalekha Hassan who was the deputy secretary-general of the Ministry of Finance. She was appointed in February this year to replace Datuk Ahmad Hashim.

There could possibly be more appointments from Proton’s parent Khazanah Nasional which has been trying to salvage the company after it started bleeding in the first quarter of its 2005 financial year.

Khazanah controls slightly less than 43% of Proton’s equity. The resignations came at a time when Proton sales has been dwindling and the company hard pressed to make ends meet.

About five years ago in 2002, Proton’s sales numbers stood at about the 215,000 mark, but has since dwindled by about 45% to less than 120,000 in 2007. Proton’s cash hoard (which is essential for it to churn out new models) has also been substantially reduced.

As at December last year, Proton had in its kitty about RM985 million. In contrast, at end-2004, Proton had about RM3.2 billion in cash and bank balances.

For the nine months ended Dec 31, 2007, Proton suffered a net loss of RM32.9 million on the back of RM3.9 billion in sales. This, however, is an improvement from its showing in FY06, where the company incurred losses of some RM590.4 million, from RM3.6 billion in revenue.

Since mid-November last year, Proton has shed slightly more than 20% or about RM600 million in market capitalisation. Proton fell six sen to close at RM3.88 yesterday.

Proton recalls 34,000 Savvy cars

PETALING JAYA: Proton is recalling its Savvy cars over a possible problem with regards to the car’s rear-wheel bearing.

The company said a recent inspection has brought to its attention that water could get into the bearing, which could lead to a malfunction.

“The safety and satisfaction of our customers is a primary concern. As a precautionary measure, we are recalling all Savvy’s for inspection and repair,” Proton managing director Datuk Syed Zainal Abidin Syed Mohamed said in a press statement.

The recall will affect a total of 34,000 cars. All Savvy owners are advised to take their cars to the nearest Proton Edar or EON service branch for an inspection.

Proton said it would conduct the necessary checks and replacements at no cost to the customer.

They can also call Proton i-Care at 1-300-880-888 for further info.

25-02-2008: Full throttle ahead for Proton, say analysts

PETALING JAYA: Proton Holdings Bhd appears to be firmly set to return to the black for the financial year ending March 31, 2008, now that its two latest models seem to have overcome issues of quality previously associated with the national carmaker’s product range, said analysts.

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.

11-02-2008: New Waja for high-performance driving

SHAH ALAM: Proton Holdings Bhd has revamped its Waja model with the introduction of the Waja Campro 1.6 Premium (CPS), designed to appeal to buyers who prefer high-performance driving.

The maximum power output for the revamped car had increased by 13% to 125 horsepower (hp), from 110hp on the standard Campro engine, Proton said in a statement.

The engine is also environmentally friendly while complying with European emission regulation, it said.

It said the Campro CPS utilises cam profile switching and variable intake manifold to give high power and rapid response whilst maintaining fuel efficiency.

Proton managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said the national carmaker was striving to improve itself in every aspect, particularly in terms of product offerings.

“The time is right for this change and I’m optimistic the market will receive this new model in a positive manner,” he said.

The new Waja Campro CPS comes in two options of transmission, five-speed manual and four-speed automatic. The manual transmission is priced at RM61,888 while the automatic is RM64,888 and comes in six colours.

The Waja Campro 1.6 Premium CPS also comes with an extended warranty programme, which is three years after manufacturer’s warranty.

Proton aims to repeat success story with new Saga

KUALA LUMPUR: When the first generation Proton Saga was launched 23 years ago, the nation stared in awe at the car. Just like the very first car that rolled out from the Perusahaan Otomobil Nasional Bhd factory in 1985, the new Saga, which was launched yesterday, created the same effect.

The new Proton Saga represented more than a motor vehicle, Proton Holdings Bhd chairman Datuk Muhammed Azlan Hashim said. He said it symbolised Proton's perseverance that had paid off.

“We are no longer a mere automobile assembler. To date, we have sold about 1.2 million units of Proton Saga worldwide. We are confident that we will be able to sell between 50,000 and 60,000 units per annum,” he said at the car launch yesterday.

The latest car, which was launched by the Prime Minister, is the sixth vehicle fully developed and built ground-up by Proton after Waja, GEN.2, Savvy, Satria Neo and Persona.

This car is a further step in Proton's efforts to reinvent itself.

Proton launched its Wira replacement, the Persona, last August. Not only did that move help lift Proton's sales, it also helped return the company to the black for its second quarter ended September 2007.

Proton's financials have been steadily improving. It reported its first profit – RM3.51mil in the quarter ended Sept 30 – after five consecutive quarters of net losses, citing improved sales, especially since the launch of the Persona and better cost management.

There were questions asked whether the new models will be the one factor that will eventually help Proton to turn around. Azlan said he hoped the introduction of new models would put Proton back in the top spot in the country and serve as an impetus for the group. Proton also plans to launch another two or three replacement models this year.

“Reinventing ourselves as the market leader is a long and on-going process. We cannot give a target when we can reinvent ourselves – it’s a moving target,” Azlan said, adding that the company would maintain its annual spending of RM400mil to RM500mil on research and development.

Azlan also did not want to speculate whether the new Saga would help improve the company's profitability but expects it to improve Proton's performance.

The carmaker is now keenly pursuing efforts to enhance its export performance, given the availability of new models and product refreshers.

It is also expanding its non-manufacturing business via sales of technology and intellectual property.

Related story:
PM: New models will help Proton

28-12-2007: Proton unlikely to sell off Lotus, says Affin Research

KUALA LUMPUR: Proton Holdings Bhd is unlikely to sell off its 63.75% subsidiary Group Lotus Plc in the near to medium term, as Lotus is Proton’s technological arm that developed the Campro engine for all current and future models of Proton cars, Affin Investment Research said.

It said Proton had also signed an agreement to allow Youngman of China access to Lotus technology in return for a royalty fee, thus selling off Lotus might result in a breach of agreement.

Proton needed the Campro technology to operate independently, given the absence of a foreign strategic partner, it said in a commentary on a news report that an interested party had approached Proton for its stake in Lotus.

“However, everything ultimately boils down to the valuation and major shareholder Khazanah Nasional Bhd’s plan,” it said.

The research house has maintained its add rating on Proton with an unchanged target price of RM6.40 based on a price to net tangible assets (P/NTA) of 0.7 times. It is also maintaining its earnings forecast for Proton, pending further development.

“The interested party is reported to be also involved in the car-making and assembling business in Malaysia. We understand that local parties like Naza, DRB-Hicom and Mofaz Group, have in the recent past expressed their interest in Proton,” it said, noting that Proton had yet to confirm the report.

“We will be disappointed if Proton is to dispose off Lotus — being its key research and development arm, at this juncture in the absence of a strategic partner,” it added.

EMERGING MARKETS ANALYSIS: Proton looks closer to home for a partner

Another year passes, and still there's no partner for Proton. The ailing Malaysian national car company has held abortive talks with GM, Volkswagen and PSA over the past months, but now it looks like Malaysia will take a different approach. Mark Bursa reports

It looks increasingly likely that Proton will end up under the control of another Malaysian company rather than forming a foreign alliance. This local solution has long been mooted as a viable way forward, though Malaysian officials have waited until all avenues have been exhausted in terms of finding an overseas technology partner. Now it looks like the time has come - and Malaysian automotive firms are forming an orderly queue.

The timing could be fortuitous. Proton has just posted a modest quarterly profit of US$1 million for the second quarter of 2007, a major improvement on the US$14m loss recorded in Q1, or the US$71m loss in the second quarter of 2006. And there has been a resurgence in sales, with Proton's Malaysian market share rising to 33.1% in Q2, up from just 26.5% in Q1.

Malaysian prime minister Datuk Seri Abdullah Ahmad Badawi has been encouraged by the signs of a turnaround at Proton. "Proton management has already demonstrated the ability to turn around. The situation that Proton is in today is not the same as two, three years ago," he reportedly said. Badawi has asked Proton to produce a turnaround plan, regardless of talks with potential partners.

However, Proton shares have fallen sharply since the discontinuation of VW talks earlier in November, falling 18.6% to a 10-year low of 4.02 Ringgit (US$1.20) immediately after the talks broke down, and share price has continued to slide to 3.66 Ringgit at the time of writing, so Proton is currently something of a bargain.

And there seem to be no shortage of takers, with at least four Malaysian companies, all with automotive interests, expressing an interest in acquiring the Malaysian Government's controlling stake in Proton. In the frame are DRB-Hicom - at one time owner of Proton; the fast-rising Naza Group; the Sime Darby conglomerate and Mofaz, an importer of used cars.

Proton's probably too big to digest for Mofaz, but the other three are serious businesses for which Proton would be a good fit. And other companies could also step into the frame - Perodua, Malaysia's other National Carmaker, has often been mentioned as a possible buyer, as is Malaysia's national oil company Petronas, which holds a small shareholding in Proton already.

Proton chairman Mohammed Azlan Hashim appears to favour a local partnership. "Whatever is good for Proton, it will definitely be on the cards," he was quoted as saying at the Bangkok Motor Show. A local alliance "has to be considered", he added. "We have to keep an open mind." And Malaysian deputy prime minister Najib Razak was quoted by the Malaysian Bermana news agency as not ruling out such a deal.

Control of Proton currently rests with Malaysia's state investment arm Khazanah Nasional, which owns 43% of the company - more than the limit allowed by the Malaysian Stock Market. Khazanah Nasional is supposed to sell off some of these shares - but appears to be under no pressure to do so.

DRB-Hicom has Proton track record
But until 2000, control of Proton lay with one of the companies that is now trying to buy it - DRB-Hicom. DRB-Hicom sold its 27% stake to Petronas in 2000, but Petronas disposed of most of this to Khazanah Nasional in 2002, maintaining just a 7% shareholding. A further 12% stake is held by the Employees Provident Fund (EPF), a social security organisation that provides retirement benefits to private sector employees and non-pensionable public service employees.

Many in Malaysia believe Proton's troubles began the day Yahaya Ahmed, DRB-Hicom's owner, and Proton chairman, was killed in a 1997 helicopter crash. At the time, Proton was on something of a roll - it controlled around two-thirds of Malaysian car sales and exports to Europe were growing.

But trouble was brewing in the form of the 1999 Asian economic crisis; it's doubtful Yahaya could have done much to alleviate Proton's resulting pain if he had lived. Further problems stemmed from the Asian Free Trade Agreement (AFTA) among nations in the regional ASEAN trade bloc, which removed much of Proton's protected status as a National Car maker. And a change of president, with Abdullah Ahmad Badawi replacing the controversial Mahathir Mohamed, weakened Proton's position.

Proton, founded in 1985 was seen very much as Mahathir's baby, and the passing of control to DRB-Hicom was seen as a further example of state patronage in action - a favoured business being passed a state asset. But Badawi is less favourably disposed to Proton - indeed, he's known to favour Naza, the upstart automaker whose founder, Tan Sri Nasimuddin SM Amin, hails from the same region in northern Malaysia as Badawi.

Nevertheless, DRB-Hicom has survived the loss of its founder and has performed a financial turnaround, returning to profit in 2006-07, according to its chairman Tan Sri Syed Anwar Jamalullail. He has built the company into a four-pronged conglomerate, with interests in automotive, services, property and infrastructure, and defence technology. Automotive is the largest part of this, accounting for 44% of the business. And DRB-Hicom has made two major advances in the car business this year.

Firstly, it has set up a joint-venture to distribute vehicles for GM. This move may have played a role in convincing GM not to invest in Proton - instead this is a much lower risk business model with plenty of growth potential, possibly involving CKD assembly in the future. GM has 51% of the JV, Hicom-Chevrolet Sdn Bhd, and DRB-Hicom 49%. The JV is targeting sales of 5,500 cars in the mid-term, largely through adding new models and opening more dealerships. It expects to sell 4,000Aveo subcompacts in 2008 and has just launched the Captiva SUV.

Secondly, DRB-Hicom has acquired a 20% stake in Edaran Otomobil Nasional Bhd (EON), Proton's Malaysian distributor with 72 dealerships. DRB-Hicom plans to build that stake to 49%. "Automotive is still our main contributor but we don't want to put all our eggs in one basket," Syed Anwar told reporters after the group's extraordinary general meeting last month.

DRB-Hicom group managing director Mohd Khamil Jamil said he was definitely interested in some form of deal with Proton. "If there is an opportunity, and if the government allows us to have an opportunity, of course we would love to see where we can participate," he said, adding that this did not necessarily involve buying Proton. "There are many ways of collaboration; not necessarily must we have a share in Proton," he said.

Naza is keen too
Naza is equally keen, according to Nasimuddin SM Amin. "Proton is a good company and we are willing to share with it our technical, research and development, and marketing experience," he told local media. Naza assembles Kia and Peugeot cars from CKD kits, and last year established its own brand, using a range of small cars sourced from Hafei Motor in Harbin, China. A new factory is being built to assemble these cars. Naza also has its own dealership infrastructure, and even though it does not have the same National Car status as Proton, Nasimuddin has the Prime Minister's ear.

Even so, Proton would be a very large acquisition for Naza.

Sime Darby the dark horse
Having the sort of large corporate structure capable of digesting it might give an advantage to the 'dark horse' in the contest, Sime Darby, Malaysia's biggest company.

Sime Darby is a diversified conglomerate whose key activities include being Malaysia's biggest property developer and the world's largest palm-oil producer, following recent takeovers. This gives it a major role in the burgeoning bio-fuels industry - as well as a market capitalisation of around US$19bn.

It's also one of the largest car distributors in Malaysia, handling brands including BMW, Ford and Land_Rover. Nevertheless, Sime Darby president and chief executive Datuk Seri Ahmad Zubir Murshid is surprisingly cool on whether the group is interested in Proton: "We have just turned around our motor business. I don't think we want to take another task at the moment," he said.

What of Perodua, since 2006 the Malaysian market leader? Perodua is effectively a subsidiary of Daihatsu - all its models are Daihatsu designs, and the added complexity of trying to digest Proton, with all its problems, just doesn't seem to fit the way Perodua operates. The company has made no comment on Proton, and seems unlikely to enter the frame.

Realistically, the battle for Proton looks like a straight fight between DRB-Hicom and Naza. Most of the smart money is on Naza, but DRB-Hicom might just bring GM back to the table. "Never say never," Steve Carlisle, head of GM's Southeast Asian operations, told reporters at the launch of the Chevrolet Captiva when asked if GM was out of the race for Proton. He said GM would make "a fresh assessment" of the position if Proton's status changed.

Equally, Naza could bring a partner to the party too. Probably not Peugeot - board director Gilles Michel recently said he did not see Malaysia as having major potential for growth. "Malaysia is smaller, and fairly protectionist, so it is not logical for us to set up manufacturing," he said. In any case, PSA is focusing on China, India and Russia.

Kia?
But Kia could be a potential partner. Its partnership with Naza is close - Naza handles all Southeast Asian training for Kia, for example, and Naza-assembled Kias are sold elsewhere in ASEAN. Malaysian and Korean tastes are similar too, so the cars would be a good fit.

When will a deal take place? Proton wants to firm up its financial and sales recovery first - but prime minister Badawi is unlikely to want his predecessor's pet project to fester for long. Expect something to happen in 2008 - probably sooner rather than later.

Mark Bursa



- Proton Timeline -

1981: Malaysian Prime Minister Matathir Mohamed begins plans to establish the first Malaysian automaker.
1983: Perusahaan Otomobil Nasional Bhd. (Proton) is launched as a joint-venture with Mitsubishi.
1985: The company begins distribution of its first model, the Mitsubishi Lancer-based Saga, Malaysia's first "national car", which captures a 47% share of the domestic market.
1986: First Proton exports - to Bangladesh.
1987: Saga captures a 73% share of the domestic market.
1989: European exports to UK commence.
1992: Proton floated on the Kuala Lumpur Stock Exchange.
1993: Iswara and Wira models launched, based on newer Mitsubishi designs.
1995: DRB-Hicom, controlled by industrialist Yahaya Ahmad, buys the Malaysian government's majority stake in Proton.
1996: Proton buys 80% of UK sports car maker Lotus.
1997: Yahaya Ahmed killed in helicopter crash; Saleh Sulong becomes DRB-Hicom CEO. Proton has 64% share in Malaysian market.
1999: Asian economic crisis puts plans to build $2bn "Proton City" plant on hold.
2000: The Waja, Proton's first in-house developed car, is launched. DRB-Hicom sells Proton stake to Petronas.
2002: Government takes back control of Proton following share-swap deal with Petronas.
2003: Proton City opens.
2005: AFTA agreement ends protection for Proton in Malaysia.
2006: Proton market share in Malaysia slips back to 26%; Perodua overtakes Proton as market leader.
2007: VW, GM and PSA all hold partnership talks with Proton - but no deal is struck. Proton share recovers to 33% in Q2.
2008: A domestic partner for Proton?

See also: EMERGING MARKETS ANALYSIS: Malaysia's Naza: how to build a car company from scratch

View more just-auto.com feature articles

Article tags: Proton, GM, PSA, Kia, Volkswagen, Chevrolet, Peugeot, Daihatsu, Acquisition, Mitsubishi, BMW, Ford, Land Rover, Smart, India, distribution, Lotus

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.

27-11-2007: All Asian markets down, Proton extends losses

All Asian markets fell at midday on Nov 27, with Hong Kong’s Hang Seng Index the top loser while at Bursa Malaysia, Proton extended its losses as investors continued to sell their shares after the government ended talks with Volkswagen last week.

At 12.30pm, the KLCI was down 7.01 points to 1,357.36, the FBM Emas fell 50.66 points to 9,161.83 and the Second Board Index lost 49.78 points to 6,797.8. The KLCI futures fell 16 points to 1,367.5.

Turnover shrank to 356 million shares valued at RM474 million. There were 136 gainers, 572 losers while 192 counters were unchanged.

Among Asian markets, the Hang Seng Index fell 2.18% or 603 points to 27,023.1, dragged by losses in Bank of China shares after a key shareholder sold a US$567 million (RM1.9 billion) stake.

Singapore’s Straits Times Index fell 1.77% to 3,358.16, Shanghai’s A Share Index 1.51% lower at 5,126.93, South Korea’s Kospi fell 0.83% at 1,839.87 and Japan’s Nikkei 225 0.45% down at 15,067.77.

Light crude oil was trading at US$97.03 per barrel. Crude palm oil futures fell RM16 to RM3,011 per tonne.

The ringgit was quoted at 3.366 to the US dollar.

At Bursa, the KLCI fell at the start of trade as investors’ sentiment was dampened by the overnight losses on Wall Street and worries about the sub-prime mortgage crisis.

However, news that the Abu Dhabi Investment Authority had reached a deal to buy an equity stake in US banking giant Citigroup for US$7.5 billion could help offset worries about credit-related losses in major banks.

Among the heavyweights, Maybank was flat at RM11.50, Telekom added 10 sen to RM10.70 while Tenaga fell five sen to RM8.95.

27-11-2007: Govt may re-look at local partners for Proton

KUALA LUMPUR: The government may still consider the possibility of a local automotive player as a strategic partner in Proton Holdings Bhd following the termination of talks with Volkswagen AG (VW) and General Motors, said Deputy Prime Minister Datuk Seri Najib Razak.

“We will decide later. We have to talk to the Proton management (on this),” he said in response to a question whether local players like DRB-Hicom Bhd and Naza Group still figured as possible partners in Proton.

Speaking to reporters after launching Scomi Group Bhd’s next generation monorail Sutra (Scomi Urban Transit Rail Application) here yesterday, Najib said although Proton’s management had its plans, it had not formally submitted a business turnaround plan to him.

Najib heads the Cabinet Committee on National Automotive Policy, which ultimately made the decision to withdraw from the negotiations with VW following a final reappraisal of whether the time was right to enter a strategic alliance with a major car manufacturer.

Last Tuesday, Second Finance Minister Tan Sri Nor Mohamed Yakcop announced that the government had decided to withdraw from talks with VW and GM to sell a strategic stake in the national car project.

Proton’s share price plunged to a seven-year low the following day to RM4.02. The stock continued its slide yesterday, falling 22 sen to close at RM3.82 with 4.92 million shares traded.

Subsequently, quoting a Finance Ministry official, who declined to be identified, The Edge Financial Daily had reported that the government would not be talking to local automotive players which had expressed interest in acquiring a stake in Proton.

Meanwhile, on the sidelines of the Scomi monorail launch, Naza Group chief executive officer Tan Sri Nasimuddin SM Amin told reporters that Naza was still keen on partnering Proton.

“Proton is a good company and we are willing to share with it our technical, research and development, and marketing experience,” he said.

On whether the withdrawal of negotiations with the foreign carmakers stemmed from Proton’s recommendation, Najib told The Edge Financial Daily: “No, it was not Proton. Just take what the Prime Minister (Datuk Seri Abdullah Ahmad Badawi) had earlier said as the factors for the withdrawal.”

Last week, following the termination of talks with VW, Abdullah had said Proton was doing well and had started turning around.

“(The) Proton management has already demonstrated the ability to turn around. The situation that Proton is in today is not the same like two, three years ago,” he had said.

Abdullah had said the government had asked Proton to have a turnaround plan, in the same way Malaysia Airlines achieved a turnaround.

Earlier yesterday, Sharon Tan reported Najib as saying that the market should give the national carmaker a chance to turn around its performance given the recent positive development in the company.

Asked if the company’s continued sliding share prices was due to market over-reaction, Najib said: “Obviously the market was expecting the announcement of strategic partner and it didn’t happen.”

“There was a negative reaction by the market but the government is mindful of the fact this is our national car company.

“We have to balance between business interest as well as the desire of the people to see the national car remain in our hands,” Najib told reporters after witnessing the delivery by Eurocopter Malaysia of three helicopters to the Malaysian Maritime Enforcement Agency in Petaling Jaya yesterday.

Najib said Proton could not survive depending solely on the domestic market, and “we have to go within Asean and slightly beyond the region.”

23-11-2007: Proton should focus on Asia, says Rafidah

KUALA LUMPUR: Proton Holdings Bhd should concentrate on building its market base in Asia instead of competing in the United States or Europe, Minister of International Trade and Industry Datuk Seri Rafidah Aziz said.

Proton would be able to compete more effectively in markets such as China, India and Southeast Asia by taking advantage of the low tax regime under the Asean Free Trade Agreement, she said.

“We should not forget that Proton is not going to be a global company. I say this because the American and European markets are different and not for us,” Rafidah said.

She was speaking to reporters after opening the Second Asia Oceania Tax Consultants’ Association International Convention 2007 here yesterday.

However, the national carmaker could make further inroads into the Chinese market through closer cooperation with car exporters in China, she said.

Rafidah also said her ministry would continue to help Proton to develop an efficient vendor system and find new markets in Asia.

On Proton’s failed bid to get Volkswagen AG to be its strategic partner, the minister said what the company needed was a technical partner rather than an equity partner.

She stressed that Proton should also be given a chance to prove itself and the company had skilled personnel who knew when a technical cooperation should be undertaken.

“Without a partner, Proton has managed to extricate itself from a difficult situation. When they prepare a plan and implement it, I am confident they have the ability to advance,” Rafidah said.

22-11-2007: Proton skids to 7-year low

KUALA LUMPUR: Proton Holdings Bhd’s share price plunged 18.6% to a seven-year low of RM4.02 yesterday as investors dumped the stock after the government backtracked from an earlier decision to seek a foreign partner for the beleaguered national carmaker.

Analysts said investors were not convinced Proton could do well on its own and were stunned by the government’s flip-flop on the matter. In response, Prime Minister Datuk Seri Abdullah Ahmad Badawi insisted that Proton was “doing well” and said that there was no issue of the government bailing out the carmaker.

Sliding from the opening bell, the stock plunged to its intra-day low of RM3.98 before recovering slightly to close 92 sen lower at RM4.02. Sentiment in the stock was made worse by the overall weak market, which saw the Kuala Lumpur Composite Index falling 11.85 points to 1,359.85.

“No, no, there is no question of bailing out. Proton is doing well today,” he told reporters on the sidelines of the East Asia Summit in Singapore yesterday. “Proton has started turning around now.”

“(The) Proton management has already demonstrated the ability to turn around. The situation that Proton is in today is not the same like two, three years ago,” he said, adding that it would bring new models to the market.

“We have asked Proton to have a turnaround plan, in the same way Malaysia Airlines achieved a turnaround,” he said. According to news wire reports, Abdullah stressed that Proton had taken the initiative to export its cars to Indonesia, India, China and the Middle East.

On Tuesday, Second Finance Minister Tan Sri Nor Mohamed Yakcop shocked analysts and investors alike when he announced that the government had decided to withdraw from talks with Volkswagen AG and General Motors to sell a strategic stake in the national car project.

He had said the decision was made by the Cabinet Committee on National Automotive Policy (headed by the deputy prime minister) following a final reappraisal of whether the time was right to enter a strategic alliance with a major car manufacturer.

In what appeared to be frenzied selling following the shocking decision, nearly 16 million Proton shares changed hands as, among others, CIMB Research maintained its underperform on the counter and TA Securities advised investors to sell the stock.

Automotive analysts did not mince their words in expressing dismay at the premature end to negotiations and said issues including the bumiputera vendor programme and Proton’s status as a national project could have influenced the government’s decision.

In no uncertain terms, CIMB Research said the latest development would hurt Proton’s aspirations to be become a reputable regional auto player.

Expressing disappointment and saying it was “taken aback” by the decision, it said questions remained concerning Proton’s long-term viability given further liberalisation of the local auto industry, the influx of new competitive models and competition from foreign carmakers.

“Proton lacks global competitiveness as it has a poor brand image, no real global presence to speak of and lacks the necessary technology to compete against other carmakers.

“With the latest turn of events, we expect Proton to remain largely a localised auto manufacturer despite recent ventures into China and Iran. These projects are very preliminary and entail high execution risks, especially in the cut-throat Chinese market,” it said.

The research house said contrary to the Proton management’s and the government’s belief, VW would not be interested in restarting talks at a later stage given that it had been spurned twice in three years.

News reports have it that VW, Europe’s biggest carmaker, is already looking for a new Asian partner and will be focusing on Indonesia and Thailand.

On Proton’s earnings outlook, CIMB Research forecast the national carmaker to narrow its losses to RM333.6 million next year and RM166.7 million in 2009 from a net loss of RM591.3 million for the financial year ended March 31, 2007.

On its valuation for Proton, it said: “We are applying a wider discount to net tangible assets (NTA) to factor in higher risks and Proton’s poorer prospects as it goes alone.”

“We now use a valuation parameter of 0.4 times CY08 NTA instead of 0.5 times CY07 NTA. Hence, despite rolling over our valuation horizon, we have cut our target price from RM4.52 to RM3.50,” it said.

Meanwhile, TA Securities Research forecast Proton’s losses in 2008 and 2009 to narrow to RM158.3 million and RM119.8 million, and expects the carmaker to register a net profit RM9.4 million in 2010.

The research house also pointed out that as in all the previous negotiations with potential foreign partners, no details were publicised by the government as to the reasons for talks to cease, leaving investors to play a guessing game.

“We suspect the substantial shareholder (Khazanah) has too many uneconomical conditions from the perspective of VW that led to such a disappointing outcome. The shareholder is under pressure to entertain demands from many quarters, most of which are under the banner of serving national interest.”

TA Research said the government could have feared that VW would only use Proton solely as another production line to serve its own presence in the region. “As Proton is a national project, the government would definitely like to see the brand name have an indefinite life. It is a matter of pride for the government,” it said.

It said while the government was betting on Proton’s better-than-expected performance in the last three months in terms of domestic sales, as well as its overseas plans for China, Indonesia, Iran and impending exports to Thailand, the sustainability of the growth was in question.

“We do not dare bet our dollars on it as we believe the industry is a numbers game. To establish oneself on a global scale, one would need strong sales numbers and economies of scale to cushion the fierce price war. And Proton does not even have this at home, let alone overseas.

“It still needs the network and a very strong brand name to catapult itself in overseas markets. It does not help to address quality perception issues at home and hope that overseas market sees the same,” said TA Research.

We Will Continue To Introduce New Models, Says Proton MD

KUALA LUMPUR, Nov 20 (Bernama) -- Proton will continue to introduce new models and expand significantly overseas by making inroads into Iran, China, Indonesia and Thailand soon among the current 24 markets it is already in.

"This will complement the improvements in the domestic market," its managing director, Datuk Syed Zainal Abidin Syed Mohamed Tahir said here today.

Responding to the government's decision announced today to call off negotiations for a possible alliance between the national car maker and Volkswagen or General Motors, he said Proton had been working on several initiatives even before negotiations began.

"These include new model development, quality improvements, dealer network consolidation and operational efficiency and export expansion," he said in a statement.

"We are now seeing some initial results of these initiatives, in particular the successful launch and reception of Persona, resulting in increased confidence amongst our customers and business associates as well as market share gains," said Syed Zainal.

He said Proton respects the government's decision.

Besides preservering to introduce new models in the future while meeting customers' expectations in service and product quality, efforts would continue in enhancing operational efficiency as well as dealer and vendor consolidation.

"This latest development, however, does not detract Proton from continuing its efforts to seek opportunities to enhance our product portfolio, access to markets, technology and operational efficiencies."

"All these will add value and place Proton in a better position for any potential future strategic partnership," he said.

-- BERNAMA

Proton Ends Talks With Volkswagen & General Motors On Possible Alliance

KUALA LUMPUR, Nov 20 (Bernama) -- Proton Holdings Bhd has ended negotiations with German car manufacturer Volkswagen and General Motors Corporation of America for a possible alliance as the fortunes of the national car maker in terms of sales and exports are improving.

Khazanah Holdings Bhd, as the major shareholder of Proton and the investment arm of the government, said in a statement here today the government has taken note of the recent positive developments at the national car maker.

"The government is, therefore, of the view that Proton's management should be allowed to continue with its plans to further strengthen the company," Khazanah said.

"The issue of strategic alliance, if necessary, can be considered at a later date," it said.

Proton first announced its intention to begin talks with Volkswagen in October 2004 for a strategic partnership while talks were to have started with GM early this year.

Second Finance Minister Tan Sri Nor Mohamed Yakcop, in a briefing here today, said Volkswagen did not walk away from the negotiations nor was there any breakdown in the talks.

Nor Mohamed said the turnaround seen at Proton in recent months was real and as such, the earlier assumptions that Proton has to have a foreign partner to stay afloat was no longer applicable.

He, however, said the government will not dismiss the possibility of Proton having strategic alliances with foreign partners in the future when the time is more appropriate and this will also be premised on the fact that Proton will be negotiating from a stronger position.

Proton's latest model, the Persona, registered strong sales with bookings of about 22,000 units by end-October following its launch in mid-August.

Proton also recently secured a deal to export 5,000 Wajas to Iran and plans are afoot to assemble 40,000 Wajas there annually by 2012.

-- BERNAMA

Proton Ends Talks With Volkswagen & General Motors On Possible Alliance

KUALA LUMPUR, Nov 20 (Bernama) -- Proton Holdings Bhd has ended negotiations with German car manufacturer Volkswagen and General Motors Corporation of America for a possible alliance as the fortunes of the national car maker in terms of sales and exports are improving.

Khazanah Holdings Bhd, as the major shareholder of Proton and the investment arm of the government, said in a statement here today the government has taken note of the recent positive developments at the national car maker.

"The government is, therefore, of the view that Proton's management should be allowed to continue with its plans to further strengthen the company," Khazanah said.

"The issue of strategic alliance, if necessary, can be considered at a later date," it said.

Proton first announced its intention to begin talks with Volkswagen in October 2004 for a strategic partnership while talks were to have started with GM early this year.

Second Finance Minister Tan Sri Nor Mohamed Yakcop, in a briefing here today, said Volkswagen did not walk away from the negotiations nor was there any breakdown in the talks.

Nor Mohamed said the turnaround seen at Proton in recent months was real and as such, the earlier assumptions that Proton has to have a foreign partner to stay afloat was no longer applicable.

He, however, said the government will not dismiss the possibility of Proton having strategic alliances with foreign partners in the future when the time is more appropriate and this will also be premised on the fact that Proton will be negotiating from a stronger position.

Proton's latest model, the Persona, registered strong sales with bookings of about 22,000 units by end-October following its launch in mid-August.

Proton also recently secured a deal to export 5,000 Wajas to Iran and plans are afoot to assemble 40,000 Wajas there annually by 2012.

-- BERNAMA

19-11-2007: Proton to attract attention on imminent VW deal

KUALA LUMPUR: Proton Holdings Bhd is expected to continue attract ing investors’ attention in view of an impending sealing of an agreement with Germany’s carmaker Volkswagen AG (VW).

The stock rose as much as 18 sen last Friday, but eased at the close with an eight sen gain to RM5, with a total of 2.65 million shares traded.

The Edge Financial Daily reported last Friday that the government was close to inking a memorandum of understanding with VW entailing collaboration in the areas of manufacturing, marketing and distribution.

Analysts said a tie-up with a foreign carmaker would be an added advantage for the national carmaker to be more innovative in terms of its models’ designs and in marketing.

OSK Investment Bank analyst Jeremy Goh said Proton’s prospects seemed quite good in the short term, adding that the key point for the deal to take place was that the government must give up mangement control to VW.

“What Proton needs to do is to create whole new models by itself; in order to do that, they need to create a new platform. If Proton can’t get the deal, they can’t get the new platform.

“Proton currently is in a tight cash position, and cannot afford to invest in a new platform,” he said.

He said that since the launch of Persona, things were starting to look better for Proton, which is experiencing an increasing market share. Goh expected Proton to narrow its losses in FY08 due to the launches of new models, leading to a breakeven by FY09.

On the other hand, Affin Investment Bank analyst Jason Yap said that he liked the stock even without VW.

“Proton has turned around since May 2007 with the help of the new models they have launched — Persona, sport edition of Savvy and Satria Neo — as well as the soon-to-be launched (Jan 2008) BLM model, a replacement for the existing Iswara,” Yap said.

He added that the turnaround showed that the management was heading in the right direction.

Yap said Proton’s sales volume and market share had been on an upward trend since May 2007, and believed that it would soon outpace the total industry volume (TIV) recovery in the coming months, especially after the launch of its new BLM model.

He said Proton’s monthly market share had also improved from a low of 20% in May 2007 to 30% now, mainly at the expense of Perodua, whose monthly market share had been declining since June 2007. Perodua remains the market leader with a share of 34%, followed by Proton (23%), in the nine months to September.

Yap said a tie-up with VW was definitely an added advantage to Proton in terms of technology and market access. It could also resolve the problem of underutilisation of its Tanjung Malim plant, currently at more than 50%.

He said the fixed overhead cost at the Tanjong Malim plant was very high, and VW could pay for a portion of the overhead costs if the partnership were to materialise.

Affin has maintained its Proton’s target price at RM6.40 based on a price over net tangible asset of 0.7 times.

Proton Expands Global Footprint Via Deal To Supply 5,000 Waja Taxis To Iran

TEHRAN, Nov 8 (Bernama) -- National car maker Proton has further boosted its export market with an order to supply 5,000 units of the Waja to be used as taxis in Iran.

In what is seen as a significant deal, the Proton Wajas would replace old taxis as part of the US$200 million urban public transportation renewal initiative spearheaded by Zagross Khodro Car Industries Co, its sole assembler and distributor in Iran.

Proton Waja, one of the models designed and developed ground-up by Proton, is marketed as "Impian," in Iran and a few other export markets.

Proton Holdings Bhd managing director, Datuk Syed Zainal Abidin Syed Mohamed Tahir, said the supply of 5,000 units of the Proton Impian taxi takes the partnership between Proton and Zagross Khodro to new heights as it would drive a new taxi operators' model in Iran.

"Spurred by this, we have put efforts to expedite the commencement of assembly operations of the Proton Gen2 in Zagross Khodro's plant in Broujerd.

"Once gazetted, this would be the second assembly operations of Proton cars in Iran after the Wira," he said in his speech after the unveiling of the new taxi here.

The deal was sealed when Minister in the Prime Minister's Department Datuk Seri Mohd Effendi Norwawi and First Deputy Mayor of Tehran, Tashakkori officially unveiled the Impian taxis at a ceremony held at the Rayzan International Conference Centre here Thursday.

Syed Zainal said Proton was confident that the Zagross Khodro group would be successfully involved in the complete value chain of taxi operations.

This initial order would pave the way for the transformation of the public transportation landscape in Iran as well as significantly boost Proton's exports, he said.

Todate, sales of Proton cars in Iran have totalled 9,634 units since its entry into the country's automotive market in 2002.

It would also raise prospects for higher exports by Proton with the Iranian government's plan to increase the current taxi car population of 70,000 to 100,000 units.

Since many taxis operating in Tehran are aging and technologically outdated, measures have been put in place to upgrade or replace a majority of them.

Mohd Effendi is here on the final leg of a mission leading a 40-member delegation to the United Arab Emirates and Iran from November 5-11.

It aims identify potentially large business opportunities for Malaysian companies and explore strategic joint ventures through alliances with Middle Eastern firms and for them to invest in the Iskandar Development Region (IDR), Northern Corridor Economic Region (NCER) and the Eastern Corridor Economic Region (ECER).

Syed Zainal also said the Proton Impian taxi provides good levels of comfort, luxury and style while enhancing the passengers' travelling experience.

"We are looking forward to the implementation of this operation model, in which Zagross Khodro group will be involved in the complete taxi operation value chain from importing, owning and after-sales support of the taxi cars to its operations," Syed Zainal said.

Expressing optimism over prospects in the Iranian automotive market, he said Proton would work closely with Zagross Khodro for Proton cars to make further inroads and to grow its potential in Iran.

"Of more significance, this initiative will not only improve the performance of taxi services in Tehran but also create 12,000 job opportunities," he said.

Zagross Khodro, a subsidiary of the Akshan Group of Companies, has diversified into many businesses.

It began its businesses with Proton in 2001 through the assembly of Wira and the import of the Gen2 for the Iranian market.

The company currently operates with nine dealers with 35 facilities covering sales, service and spare-parts in Tehran and is the midst of expanding the network by up to 34 dealers throughout the country.

Zagross Khodro's managing director, Dr Siroos Gholami, said the Proton Impian Taxi would significantly enhance Proton's presence in the market.

-- BERNAMA

Proton Gets Boost From Saga And Persona Sales

KUALA LUMPUR, Oct 31 (Bernama) -- Proton Holdings Bhd will continue to produce its 50th Merdeka promotion model, the SAGA, of which bookings have topped 31,455 units, managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said Wednesday.The continued production of the SAGA, launched in March for a one-time offer of RM26,999, was to meet the high demand, he said in a statement today.Proton said overwhelming demand for the SAGA and the 1.6-litre sedan Persona have boosted the company's domestic sales and strengthened its position in the market.Bookings for the Persona, the latest model by the national carmaker, have reached 19,840 units in the three months it was introduced."We are pleased with the reception of these two models which underscore that we are moving in the right direction in terms of our manufacturing philosophy and have indeed produced the right car for the right market at the right price," Syed Zainal said."The good response is also indicative of the growing belief and confidence in Proton and its cars," he said.A total of 22,725 SAGAs have been delivered and half of the Persona bookings, at 9,645 units, have been fulfilled, Proton said.The current waiting period for the SAGA is about one to two months while for the Persona, it ranges from one-and-the-half months to two-and-the-half months for the base line model, two to three months for the medium line and three to four months for the high line.Syed Zainal said the high line variant was a hit with customers with demand exceeding Proton's expectation.The company, he added, will do its best to increase production capacity and cut down the waiting period.According to Proton, the Persona is also making waves in Singapore, the first country to which the model was exported.-- BERNAMA

13-09-2007: Proton’s unit wants to be major parts supplier to Toyota

SHAH ALAM: Miyazu (Malaysia) Sdn Bhd, a unit of Proton Holdings Bhd, wants to be a key stamping dies and parts supplier for Toyota Auto Body Malaysia (TABM) and Toyota Group globally from its newly-set up plant in Shah Alam, Selangor.

The company has secured a RM4 million contract from TABM to supply car chassis for the next three years. The contract is expected to account for 80% of its production capacity.

Miyazu said its 35,700-square metre complex is one of the largest and most modern stamping facility in the country.

At the handing over of the first blanking sheet to TABM yesterday, Proton’s manufacturing director Datuk Kamarulzaman Darus said the contract would see the company supplying 29 auto parts to TABM, which would be delivered four times daily on the basis of pull system in compliance with TABM’s production cycle.

The system is expected to increase Miyazu’s overall equipment effectiveness (OEE) by 15%.

“This is a manifestation of capabilities of local engineers and workers in adopting to a vast degree of client requirements, in this case our ability to meet with Toyota standards, known for having one of the highest standards globally,” said Kamarulzaman.

“This new relationship will also see Miyazu and TABM’s engineers collaborating to implement quality and process control improvement, adopting the Toyota Production System, pull system, total productive maintenance, of which are key pillars to an efficient delivery and cost control system,” he said.

Kamarulzaman added that the cooperation with TABM would benefit Proton, as it would contribute towards the group’s overall revenue as well as providing Proton and Miyazu’s employees an opportunity to enhance and upgrade their capabilities.

To meet TABM’s “zero scratch” and “zero dust” requirements, Miyazu had to tweak its existing system to achieve consistent standards in their blanking sheets process and delivery.

Miyazu chief operating officer Amrizal Abdul Majid said the company planned to implement the stamping production line in its Tanjung Malim plant in the next fiscal year after monitoring the performance of its Shah Alam facility.

Miyazu is also in talks with Edaran Tan Chong Motor Sdn Bhd, distributor of Nissan vehicles in Malaysia, to supply stamping parts to its franchise holder and Nissan vehicles assembler in the country.

Miyazu, established in 2003, has a paid-up capital of RM17.5 million. It is 51%-owned by Proton, 34% by Miyazu Seisakusho (Japan) and 15% by Sojitz Corporation.