Hong Leong Investment Bank Bhd (HLIB) has maintained its “buy” call on DRB-Hicom Bhd, backed by its positive outlook on DRB-Hicom’s sustainable automotive segment, leveraging on Proton, Honda and Mitsubishi.
The research house said DRB also has a strong leverage onto the robust growth momentum of Proton over the next few years, as the unit aspire to reclaim the throne in Malaysia and expand into regional market.
“Financial Year 2023 (FY2023) earnings will continue to be driven by the automotive segment, thus we maintain the target price (TP) at RM2.24,” it said.
On the other hand, Kenanga Investment Bank reduced its FY2023 to FY2024 net profit forecast by 11% to 12% and TP by 13% to RM1.40 (from RM1.60), and maintained its “market perform” call on the counter.
“Persistent part shortages faced by DRB-Hicom have resulted in sub-optimal production levels for its Proton and Honda vehicles.
“Furthermore, costs remain elevated due to high-cost inventory, high freight cost and unfavourable foreign exchange,” it said in a note.
Kenanga elaborated that despite the challenges, DRB-Hicom plans to roll out two new Proton electric vehicles models this year, to be followed by six more over the medium term.
At 10.42am on Friday (March 3), DRB-Hicom share price was up four sen to RM1.43, with 380,400 shares exchanging hands on Bursa Malaysia.
