DRB-Hicom unlikely to go private

  • Express bus drivers say crashes not entirely their fault
    Express bus drivers say crashes not entirely their fault

    KUALA LUMPUR, April 24 — Swift enforcement and a proper monitoring system must be put in place as bus drivers and passengers shared their views over the Transport Ministry’s latest guidelines on... …

  • MH192’s number three main wheel burst during take off, says Hishammuddin – Bernama
    MH192’s number three main wheel burst during take off, says Hishammuddin – Bernama

    Preliminary investigation findings on the Malaysia Airlines (MAS) flight MH192 incident has revealed that the number three main wheel of the aircraft had burst during take off. Acting Transport Minister Datuk Seri Hishammuddin Hussein (pic) said the aircraft was currently grounded at the MAS Engineering facility in Kuala Lumpur International... …

  • Bible banned from Pahang hotel rooms – Bernama

    The Pahang Islamic and Malay Customs Council (MAIP) has prohibited hotel proprietors in the state from placing religious reading materials of other religions other than Islam in their rooms. According to MAIP deputy president, Datuk Seri Wan Abdul Wahid Wan Hassan, a letter of prohibition on the matter had been sent to 147 hotels across the... …

  • Pre-lim report to ICAO not public, yet

    Malaysia has yet to decide on whether the preliminary report on the MH370 incident submitted to the International Civil Aviation Organisation (ICAO) will be made public.   "We have issued the preliminary report. We've sent it to ICAO but we have not made a decision to release to media or the public," Department of Civil Aviation Chief Azharuddin Abdul Rahman said during a press conference in Kuala Lumpur.   Asked again on why it will not be released to public, although it is common practice, …

  • Take second job to tackle household debt, urges AKPK – Bernama
    Take second job to tackle household debt, urges AKPK – Bernama

    The Credit Counseling and Debt Management Agency (AKPK) has urged Malaysians to take a second job to help them tackle the high rate of household debt. Chief executive officer Koid Swee Lian (pic) said those in the teaching line, for example, could give extra classes to earn more money. "Teachers could earn more money by giving tuition to... …

  • International team probing MH370 to be finalised next week, Hishammuddin says
    International team probing MH370 to be finalised next week, Hishammuddin says

    KUALA LUMPUR, April 23 — Malaysia expects to finalise by next week the list of members on the independent team of experts commissioned by Putrajaya to carry out an extensive probe on the... …

DRB-Hicom Bhd

(Feb 5, RM2.57)

Maintain buy at RM2.57 with a revised target price of RM3.65 (from RM3.35): DRB-Hicom is a deep value stock (43% discount to sum-of-parts [SOP]). But a privatisation is unlikely, even with the perceived sensitive nature of some of its businesses such as Defence Technologies Sdn Bhd (Deftech) where there is little disclosure. Moreover, the privatisation rumour is not new and would have already occurred at lower levels.

However, it may spin off its motor business given the ongoing capital requirements for Proton, Lotus and the expansion of Volkswagen capacity by 50,000 units by 2016/17. We are confident DRB-Hicom will turn around Proton given recent developments:

(i) rationalising the distribution business;

(ii) tiering auto parts suppliers;

(iii) purchasing engine from Petroliam Nasional Bhd; and (iv) collaboration with Honda.

We expect Bank Muamalat Malaysia Bhd and Pos Malaysia Bhd to be the anchors of its services division (three-year earnings before interest and tax [Ebit] compound annual growth rate [CAGR] of 14%).

The bank is expected to register at least RM200 million profit before tax for the financial year ending March 31 (FY13) (first half: RM147 million) driven by higher financing income, fee and non-funded income.

The expansion of Pos’ courier business, transformation into a one-stop retail shop, and Ar-Rahnu, will drive up profitability further.

Alam Flora Sdn Bhd, Puspakom Sdn Bhd and KL Airport Service Sdn Bhd have vast potential with the expansion to two new states, potential mandatory inspection of private vehicles and opening of klia2 respectively.

We raise our target price by 9% to RM3.65 (20% discount to SOP value) after adjusting for the other landbank and a revised target price for Pos of RM4.60 (against market value).We cut forecast FY13 net profit by 8% after factoring in our forecasts for Pos, but raised FY15F net profit by 7% with the inclusion of new property launches.

We expect property to be its fastest growing division (three-year Ebit CAGR of 174%), led by new launches, Glenmarie Gardens and Glenmarie Puchong, in FY14/FY15. This division is under-appreciated; it offers RM21 billion gross development value and 3,736 acres of land. — HwangDBS Vickers Research, Feb 5

 

This article first appeared in The Edge Financial Daily, on February 6, 2013.

 

Follow @YahooMalaysia on LINE for daily news updates.

Comments on Yahoo pages are subject to our link to Comments Guidelines. You are responsible for any content that you post. Yahoo is not responsible or liable in any way for comments posted by its users. Yahoo does not in any way endorse or support comments made by its users.

  • MH370 passenger’s partner tells of strange email from sacked Fox officer The Malaysian Insider
    MH370 passenger’s partner tells of strange email from sacked Fox officer

    The partner of an American passenger aboard the missing Malaysia Airlines flight MH370 has spoken about how a Fox executive who was recently sacked by the news station had contacted her offering to raise funds on her behalf. Sarah Bajc, whose partner Philip Wood is among the 239 people on board the missing plane, told the Sydney Morning Herald... …

  • The Poop on Pooping: 5 Misconceptions Explained LiveScience.com

    Here is the truth behind five common misconceptions about defecating. Misconception No. 1: Daily pooping is normal, and optimal. …

  • Dr Ling’s son chose wine over woman, court hears The Malaysian Insider
    Dr Ling’s son chose wine over woman, court hears

    The son of former MCA president Tun Dr Ling Liong Sik today reached an out of court settlement with his ex-girlfriend in a breach of contract suit over seven properties registered under their joint names. Ling Hee Leong and businesswoman Teh Chee Yen agreed to settle out of court after he took the stand briefly and testified that he had chosen... …