28-01-2009: Proton's China sales appear to be on track

PETALING JAYA: Proton Holdings Bhd is estimated to have supplied at least 13,000 units of its GEN.2 cars to China's Jianhua Youngman Automobile Manufacturing Co Ltd since the end of 2007 to be re-badged and sold under the Europestar brand in the country.

OSK Research Sdn Bhd's analyst Ahmad Maghfur Usman said this was based on the information given by the national carmaker, adding that on the higher end of the scale it could have supplied up to 17,000 cars.

"Based on the agreement between the two that a minimum 30,000 cars will be supplied over two years, Proton appears to be on track.

"Although the contribution from this to Proton's revenue stream should be quite stable, Proton however has not shared much more details with us (analysts)," he said.

Efforts by The Edge Financial Daily to obtain further details from Proton came to naught, as the national carmaker seemingly preferred not to pre-empt its third-quarter (3Q) results announcement due next month.

Proton in July 2007 announced that its unit Perusahaan Otomobil Nasional Sdn Bhd would supply 30,000 completely-built-up cars to Youngman to be re-badged.

At the same time the company, through its 55%-owned Proton Parts Centre Sdn Bhd agreed to supply genuine service parts to Youngman.

It also said Youngman would have access to engineering and development consultancy services from Proton via its subsidiaries in the Lotus group of companies, for the development of complete-knocked-down (CKD) cars for Youngman in China.

Ikmal Hafizi of TA Securities Research, like Ahmad Maghfur, said the Proton management kept details of its dealings with Youngman close to their chest.

"They are very cautious as to what they want to share with analysts these days," he said.

Meanwhile, commenting on the government's call for Proton to expedite the design of the so-called "Malaysian taxi", Ahmad Maghfur said there were still many issues to be considered by the national carmaker before embarking on the project.

"At the outset, Proton can quite easily do minor facelift and interior shaping for a taxi as it is just a question of making changes to the body, and the engine is not in issue as its existing technology is sufficient.

"What remains to be seen is whether the government would provide any incentive for local cabbies to buy such a vehicle. It would be tough to get all taxis converted to a new design without incentives as many taxi drivers are still maintaining their Proton Iswara models," he said.

31-12-2008: Nadzmi returns to Proton as chairman

KUALA LUMPUR: Proton Holdings Bhd has appointed Nadicorp Holdings Sdn Bhd executive chairman Datuk Nadzmi Mohd Salleh as the national carmaker’s new chairman with effect from tomorrow, replacing Datuk Mohd Azlan Hashim.

In a statement yesterday, Proton said Nadzmi was no stranger to the group, having served as deputy managing director of Perusahaan Otomobil Nasional Sdn Bhd from Nov 2, 1992 and then as MD from 1993 to 1996.

Nadzmi had also held various senior positions in Edaran Otomobil Nasional Bhd, including as executive director and chief executive officer. He is now a director of several companies, including Ranhill Utilities Bhd, JT International Bhd, VS Industry Bhd and Kumpulan Kenderaan Malaysia Bhd (KKMB), which is the major shareholder of bus company Konsortium Transnasional Bhd (KTB), formerly Park May Bhd. Nadzmi is the chairman and managing director of KTB.

Nadzmi, via KKMB, holds a 40.3% indirect stake in KTB after the recent disposal of a 22% stake comprising 65 million shares on Dec 1. He also holds a small direct stake of 1.3%, or 3.92 million shares, in KTB.

Nadzmi was also appointed director and deputy chairman of Proton’s subsidiary and distribution arm Proton Edar Sdn Bhd from Sept 22, 2005. He is currently the president of the Badminton Association of Malaysia.

“Although there remains a lot to be done, Proton today is undoubtedly on a better foundation to move forward and better compete with other automotive companies,” Azlan said at a Proton board of directors’ meeting yesterday.

Azlan, 51, has been with Proton since December 2004 and is resigning as chairman and director. He was appointed a director on Dec 17, 2004 and assumed the position of chairman on Feb 7, 2005.

Azlan added that Proton’s progress had been made possible by the strong support of the government, its shareholders, the wider automotive community including component vendors and dealers, directors, management and staff.

Azlan, an accountant by training, is now a major shareholder of Silk Holdings Bhd or SILK (formerly Sunway Infrastructure Bhd), with a deemed interest of 36.16% comprising 65.09 million shares in the expressway concessionaire, which has proposed a regularisation scheme to put itself on a better financial footing.

SILK owns Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd, the concessionaire that operates the Kajang traffic dispersal ring road in Selangor. Azlan and his business partner Johan Zainuddin Dzulkifli bought the SILK stake from the latter’s bondholders for RM11.1 million cash or 17 sen per share.

SILK was traded unchanged at 18 sen while Proton rose two sen to RM1.85 yesterday. KTB was untraded at 22 sen.

Win-win for Proton-Mitsubishi?

A win-win relationship is a worn out cliche but somehow it rings true in the reconciliation between Proton Holdings Bhd and Mitsubishi Motors Corp.

Announcing the product-collaboration deal last Friday, Proton said both parties had signed agreements that will lead to Proton rebadging a Mitsubishi to replace the Waja, Mitsubishi rebadging a Proton for markets Proton is not involved in and they will jointly build a new Proton car.

The deal, also, indirectly spelt out the availability of Mitsubishi technology to Proton, help from Mitsubishi to upgrade Proton’s quality and the expansion of Mitsubishi into South-East Asia using Proton as a base.

At first glance, the deal is a winner as it offers not only the tangible benefits of more models and high sales when economic conditions improve, but also addresses some of the intangibles within Proton.

It also comes at little cost to Proton as it does not have to give up equity in the company while still getting the benefits a strategic equity-based partnership would have delivered.

The deal comes at a time when sales of cars globally are slowing. The credit crunch induced global recession is seeing car companies suffer such a steep drop in sales that some of the biggest names, most notably from Detroit, are fighting for survival.

Such a backdrop might have played into Proton’s hands as the relationship with Mitsubishi, which would have been more unlikely should economic conditions had been the reverse of its terrible state now, offers it a chance to take stock of its own processes and strengths and to see how it can re-position itself once economic conditions recover.

The immediate benefit for Proton would be in sales and helping to push volumes up would be the Waja replacement model.

The now tired looking Waja has been a money maker for Proton throughout this decade and getting a new car in this C-class segment is critical for Proton, especially as it takes on the more entrenched Japanese models in the country.

Furthermore, a Waja with a Mitsubishi DNA would be a valuable commodity for Proton as it would gain additional credibility in markets in South-East Asia, and possibly in the Middle Eastern markets where Proton is trying to make a name.

Quality has been a major issue for Proton for years and although the company has made significant improvement in this aspect, such as addressing the infamous dodgy power windows, there is still room for enhancement.

Proton has hired a German with experience at BMW to spearhead the quality improvement, but having Mitsubishi in the frontline working on improving the quality of the models that the companies would be jointly involved in would be a big boost for Proton.

Another spin-off from the product collaboration might be the use of Proton’s plants as a base for Mitsubishi models into South-East Asia.

At the moment, Mitsubishi cars are mainly imported as CBU units into the Asean market and having an assembly/manufacturing operations at Proton’s Tanjung Malim plant, where there is ample capacity, would allow Mitsubishi cars to be sold at cheaper prices in this region.

The deal also has an engineering services agreement. Here, Proton, which already has Lotus for some aspects of engineering skills, would utilise and likely pay Mitsubishi for engineering services towards the development on a new Proton model.
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Bumpy ride ahead for Proton

National car maker is operationally weak entering the slowdown

PETALING JAYA: The automotive market is expected to be sluggish next year due to a slower economic expansion, but Proton Holdings Bhd appears to be operationally weak in entering into this slowdown.

It reported a small operating loss of RM670,000 in its second quarter ended Sept 30, a deterioration from the small operating profit of RM13.5mil in the preceding quarter.

This is in contrast with the other large automotive companies’ results which peaked in their third quarter (Q3) in September. This was true, for instance, for UMW Holdings Bhd’s automotive division which reported an operating profit of RM265mil, its highest quarterly profit this year.

Likewise, Tan Chong Motor Holdings Bhd announced an operating profit of RM118mil in its third quarter, also its best quarterly result this year.

It’s therefore surprising that Proton’s operating results deteriorated - its operating expenses exceeded operating revenue by RM670,000 in its September quarter. It is believed the loss from its manufacture and sale of cars was partly due to its exports - its cars were sold at a lower price overseas.

Proton’s net profit of RM43.8mil in its second quarter came largely from “other operating income” amounting to RM53mil. This is a sizeable figure for other income and analysts do not seem to have a handle as to the sources of this income.

It could be a combination of interest income - Proton had gross cash of RM1.4bil - and possibly, a write-back of a doubtful debt.

Proton said that included in its income statement is a reversal of allowance of doubtful debts amounting to RM18mil. The doubtful debt is believed to be related to MV Augusta SpA that it previously owned.

The “other income” could also have included profit from services provided by Proton.

Aseambankers expects this will be a good year for Proton which it forecast to earn a net profit of RM318mil. The forecast assumes Proton will receive another research and development (R&D) grant of RM150mil, following the RM194mil it obtained from the Government last year.

OSK Investment Research forecast a lower net profit of RM180mil for the current financial year ending March 30 (FY09). It did not include any R&D grant that might be given as it considers that to be an exceptional item.

One of Proton’s financial strengths is the cash it holds. AmResearch, however, believes that could dissipate. It stated in a note that Proton’s operating cashflow could be negative RM470mil while it spends another RM470mil on R&D and other investments in FY09. That’s a total of RM940mil.

AmResearch is cautious in believing that an increase in inventory could cause the operating cashflow to be negative. A more watchful supervision over inventories would, of course, enable Proton to maintain a positive operating cashflow.

If business conditions prove to be very difficult, the negative cashflow would erode away most of its cash reserves.

At any rate, some analysts have surveyed the market and they believe total industry volume registered another decline in November, following the decline in October. It remains to be seen how Proton will brace itself through this bumpy period compared with its peers in this region.


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Higher target price for Proton

KUALA LUMPUR: OSK Investment Research has raised its target price for Proton Holdings Bhd from RM1.64 to RM1.81 after the national carmaker’s announcement of a non-equity partnership agreement with Mitsubishi Motor Corp (MMC).

The agreement would involve a possible rebadging exercise and to develop a new small hatchback car to be released in 2010.

“However, we view the agreement as being more favourable to MMC pending the confirmation of Proton’s rebadged model by Mitsubishi,” it said in a report released on Tuesday.

The research house was revising its earnings assumptions for FY10 onwards to incorporate its new capital expenditure assumptions given the lower depreciation expense arising from the strategic tie-up.

OSK Research said FY11 included a higher volume assumption of the Waja, which sources claim would likely be a rebadged Lancer, thus boosting potential revenue.

“This raises our target price from RM1.64 to RM1.81 but we maintain a Neutral due to the upward revision in earnings by 12% and 22% for FY10 and FY11 respectively,” it said.

Last Friday, Proton announced it had entered into a strategic partnership with Mitsubishi. It favoured this move given its similar technology platform tracing back to its first model of the Saga based on the Lancer platform.

Rebadging is common amongst automakers in their attempts to cut research and development expenses as well as production and marketing costs. Proton has finally jumped on the bandwagon in order to revitalise its fleet of upcoming models by taking the shortcut.

OSK Investment Research said this would reduce research and development (R&D) expenses over the shorter term to be shared with MMC.

It had reduced its estimated R&D expenses by RM11mil to RM45mil from FY10 onwards, at similar levels back in FY03 when MMC was still Proton’s strategic partner.

“Our capex estimates have been fine tweaked accordingly to RM429mil from RM600mil in FY10 and FY11. A company source claims that the new Waja, slated to be replaced by 2010, would be based on the Lancer or Galant.

“Given this possibility, we have changed our assumptions of the Waja come FY11 from 5,000 units to 25000 units on higher demand, effectively increasing our revenue estimates by 11%,” it said.

OSK Research said given the potential savings from R&D expenses, lower depreciation costs and the higher volume assumption of the Waja, it was revising upwards its bottomline estimates by 12% (RM21.59mil) and 20% (RM36.64mil) respectively for FY10 and FY11.

Proton Holdings inks product collaboration deals with Mitsubishi

KUALA LUMPUR: Proton Holdings Bhd has today entered into a product collaboration arrangement with Japanese rival Misubishi Motors Corp.

The tie-up, involving three agreements between Proton Holding's wholly owned subsidiary Perusahaan Otomobil Nasional Sdn Bhd and Mitsubishi, enables the Malaysian carmaker to tap the technical expertise of its foreign partner, according to filings to Bursa Malaysia today.

Both parties have signed a development agreement to develop a new car model for Proton. At the same time, Misubishi, under a licence agreement, has granted Proton the rights to manufacture the Japanese carmaker's components and rebrand them under the Proton banner.

Third, an engineering services agreement will see Misubishi extending its expertise to Proton Holdings for the production of the Japanese firm's licensed products.

"At the same time, Perusahaan Otomobil has entered into an understanding with Mitsubishi in relation to product collaboration for the development of a new vehicle model for Proton. The understanding encompasses initiatives to be taken by both companies to improve both build and component quality for Proton vehicles.

"Concurrently, both companies shall explore possibilities on export and contract assembly wherein the parties commit to conduct feasibility studies on the said areas within three months from the date of signing," Proton Holdings said.

三菱自動車とプロトン社、三菱ブランド車の生産などで協業

三菱自動車はマレーシアPerusahaan Otomobil Nasional Sdn Bhd（以下プロトン社）と、プロトン社における新型車両の開発・生産に関する契約を締結したと発表した。
　
　三菱自動車はプロトン社における新型車両の開発を支援するほか、プロトン社は三菱自動車の車両をベースとした新型車をライセンス契約によって生産する。開発・生産分野の協業を通じて三菱自動車はマレーシア向けの事業を拡大する。

　両社は2004年に資本提携を解消したが、2006年にはプロトン社の新規モデル開発に三菱自動車が協力することを含む協業提携に関する覚え書きを締結していた。今回の提携内容以外についても、協業内容を検討していくという。

Proton’s 2Q net profit at RM44m, MD to stay on

SHAH ALAM: Proton Holdings Bhd, whose managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir’s contract will be renewed, posted a 12-fold rise in net profit to RM43.81 million in its second quarter ended Sept 30, 2008 (2QFY09) from RM3.51 million a year earlier.

The better performance was driven by increased domestic sales and improved margins arising from better product mix and lower discounts.

Revenue jumped 40% to RM1.84 billion from RM1.31 billion, while basic earnings per share (EPS) rose to eight sen from 0.6 sen. It declared an interim dividend of five sen per share less tax.

Net assets per share rose to RM10.05 as at Sept 30 from RM9.87 on March 31, 2008, while net cash balance more than doubled to RM1.42 billion from RM675 million last year.

For the six months to Sept 30, net profit totalled RM95.84 million versus a loss of RM43.25 million a year earlier as revenue surged 45% to RM3.55 billion from RM2.45 billion. Sales volume rose 35% to 84,565 units in the first half from 62,485 units a year earlier. Operating expenses rose 38% to RM1.84 billion.

Speaking to reporters yesterday, Proton chairman Datuk Mohammed Azlan Hashim said the board had decided to renew Syed Zainal’s contract, but the details of the contract, including the tenure, were still being finalised.

He said Proton’s fifth consecutive quarter of profitability demonstrated its ability to sustain its performance despite the increasingly challenging environment and proved that its strategy of having “the right car, at the right price and at the right time” was working well.

Syed Zainal said as of October this year, Proton’s domestic market share was 33.3% with a total of 122,351 units of registered cars since January.

He said domestic bookings for the Persona model had now reached 59,028 units and 91,127 units for the Saga. He said it would continue to focus on high-growth regional markets such as Asean, China, India, the Middle East and North Africa to boost its exports and for economies of scale.

“We had just launched the Persona in the Middle East and GCC markets, namely Saudi Arabia, Egypt and Oman this month while Qatar and Bahrain will receive the model next month. Earlier, we introduced the Persona in Singapore and Indonesia in July, and the Persona CNG in Thailand in October. We also launched the Saga in Brunei last month,” he said.

Syed Zainal said that going forward, the key challenges facing the automotive industry included rising raw material costs, more efficient vehicles coming into the market, possible decline in demand due to higher interest rates among lenders and the velocity in foreign currency market.

“However, Proton has taken steps to mitigate these factors, and we have some near- term initiatives to address the challenges. Some of the initiatives are efficient cash flow management, cost reduction, higher manufacturing efficiency and improved sales and distribution network,” he said.

Asked if Proton could sustain its sales volume given the uncertain economic outlook, Mohammed Azlan said: “We have to be realistic.

“Conditions are getting tougher but not just for us. There is a strong, urgent need to diversify into the international market.”

“While global total industry volume could decline, it does not mean the company cannot grow. The company has to focus on products that are more attractive to the market,” he said.

When pressed further on whether Proton would be able to sustain its profitability, he said: “We would need to play it by ear”.

Shares of Proton have fallen 51% this year while the main stock index has dropped 40%. The stock added two sen to RM1.80 yesterday.

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.

25-07-2008: Don’t make Proton a scapegoat, says PEDA

KUALA LUMPUR: Proton Edar Dealers’ Association (PEDA) has come out strongly to defend Proton cars in the wake of the Terengganu state government’s move in buying 14 Mercedes E200 Kompressor as its official cars.

Its president Wah Ahmad Sepwan Wan Abd Rahman, in a statement yesterday, said the association, which has a network of 180 authorised Proton service centres, found it illogical that huge sums had been spent by the Terengganu government for the maintenance of Proton Perdana.

Terengganu Menteri Besar Datuk Ahmad Said had claimed that the state administration was buying the Mercedes cars to save costs, as it had spent between RM150,000 and RM170,000 over four years for the upkeep of the Perdana V6.

“Proton’s new models carry full manufacturer’s warranty for at least two years. Does that mean the state government spent the large sum (on maintenance) after the warranty period?

“If this is the case, then the RM150,000 was spent over two years and not four. PEDA demands a thorough investigation into the matter to determine whether the maintenance was carried out by qualified parties and if the costs exceeded that of authorised Proton service centres,” he said.

Wan Sepwan said there could be a possibility that the maintenance of the state’s fleet of cars was not carried out properly, resulting in scams by unscrupulous parties.

11-07-2008: Proton launches Persona range in Indonesia

JAKARTA: Proton Holdings Bhd has launched its Persona range in Indonesia as the Gen.2 Persona, the fifth model it has introduced in the country since entering the market there in March 2007.

The company first introduced the Savvy and Gen.2 models last year, followed by the Waja and Neo ranges later.

The Gen.2 Persona that was launched at the 16th Indonesia International Motorshow on July 11 is priced at Rp122 million (RM43,213), and is available in five variants, namely the 1.6-litre base-line automatic and manual; 1.6 medium-line automatic and manual and the 1.6 high-line automatic.

In a statement on Friday, Proton said the cars would be available in seven colours.

Proton managing director Datuk Syed Zainal Abidin Syed Mohd Tahir said its vehicles had been well received in Indonesia and the Gen.2 Persona was tangible proof of the company’s long-term commitment in Indonesia.

“This is the second year that we are participating in this huge motor show and we are proud to be able to introduce the Persona to the people of Indonesia at this prestigious event.

“The Persona boasts fuel economy that is very competitive in the 1,600cc segment,” he said.

He said PT Proton Edar Indonesia, the company’s local subsidiary, was working hard to grow its presence while introducing Indonesians to a wide range of services and products from Proton.

A year ago, the company began with three dealerships in Indonesia and this has now increased to five dealerships in Warung Buncit, Bandung, Makasar, Pekanbaru and Palembang, and one branch in Slipi, Jakarta, all equipped with 3S capabilities.

Syed Zainal said plans were underway to open more 3S centres in Pondok Indah and Kalimalang, with the former serving as headquarters and another dealership in Kelapa Gading.

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

18-01-2008: Proton targets sales of 50,000 to 60,000 Saga sedan

KUALA LUMPUR : Proton Holdings Bhd targets to sell 50,000 to 60,000 units of the new Proton Saga sedan model in the country, its chairman Datuk Mohammed Azlan Hashim said.

He said the new Saga and the recently-launched Persona models would help to boost Proton’s financial performance this year.

He said the old Saga was the most popular model in the Proton family with 1.2 million units sold, and the new Saga had so far received more than 6,000 bookings even before its official launch on Jan 18.

“It has a better start than the Persona, and we are very encouraged by that,” Azlan said at a press conference after Prime Minister Datuk Seri Abdullah Ahmad Badawi officially launched the new Saga sedan.

Priced between RM31,500 to RM39,998 on-the-road, the new 1.3-litre Saga is available in seven colour variants.

Azlan said the new model had similar values of its predecessor as the car is designed to be an “affordable family-size sedan”.

Besides catering to the local market, Proton wants is to export the new Saga model. “Clearly, we realised the domestic market will not be large enough to offer any manufacturer the economies of scale,” Azlan said.

As such, Proton’s plan was to produce new models that would meet both the local and international markets’ requirements, he added.

Currently, the company is looking at the possibility of exporting cars to countries within Asean, the Middle East and India.

On whether Proton has a timeframe to regain its market leadership position, in the passenger car segment, Azlan said there were no specific deadlines as an “on-going process”.

He also said Proton management was working hard to turn around the company and it was banking on the new Saga and Persona sales to boost its performance.

Proton managing director Datuk Syed Zainal Syed Mohamed Tahir said the company would invest RM400 million to RM500 million every year for research and development to roll out new models as well as to “refresh” old models.

He revealed that Proton had spent about RM460 million to come out with the new Saga model alone and was planning to refresh another two to three models this year.

According to Zainal, one of Proton’s utmost concerns in developing new models was safety.

The new Saga comes with a chassis that is 75% made of high tensile steel, which will provide passengers with a basic protection cage in order to minimise the risk of injury in case of accidents.

Proton car not in showrooms despite soft launch

PETALING JAYA: The new Proton 1.3L car, codenamed BLM, has received many enquiries from potential customers, although the model is nowhere to be seen in showrooms.

Several sales representatives said they had received bookings for the car from some customers yesterday, which was the day of the soft launch of the BLM

They said that the official unveiling and naming of the car would be held next week at Dataran Merdeka, with the Prime Minister attending.

EON Glenmarie sales representative Mohd Arif Iqbal Mohd Hanafi said that about 10 people walked into his showroom yesterday to ask about the BLM.

Most of them were interested in the automatic model, he added.

“Interest is high among the people. I even had people coming several weeks before the announcement was made, to ask about the BLM,” he said.

Mohd Arif said the BLM offered excellent value for money with “tentative” prices ranging from RM31,500 for the base “N-Line” model to RM39,500 for the upmarket “M-Line” version.

Proton had earlier said the new sedan would cost between RM30,000 and RM35,000.

Seri Mestika Sdn Bhd sales representative Muhamad Nor Shamsuddin said the people who walked in were surprised when the showroom did not have the BLM model.

“We expect sales will be brisk after the official launch, because of the attractive price structure and equipment on offer, including airbags,” he added.

Proton Edar Sdn Bhd sales consultant Effandy Zainal Abidin said the enquiries revealed that customer confidence in Proton’s automobiles had improved.

He added that most customers at his showroom at the Centre of Excellence Complex wanted a second car for their family members and decided to go for the BLM.

Engineer Mohd Helmi Abd Rahim booked the automatic version of the “M-Line” model with a RM500 fee.

“My wife and I decided to book the BLM since it is affordable and has safety features such as an airbag,” he added.

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.