KUCHING: Proton Holdings Bhd (Proton) is planning to penetrate foreign markets in Asia through tie-ups.
There were plans for Proton to penetrate the Indian market through a tie-up with Hero Group. Indian National Behara Venkata Rama Subbu is on Proton’s board and he is helping Proton get into the Indian market.
CIMB-GK Research Pte Ltd (CIMB Research) further said that in Thailand Proton had hired Gee Book Kee who was a former Sime Darby veteran to help the company penetrate the Thailand market.
Proton’s wholly-owned Proton Motors (Thailand) also could form an alliance with one of the richest families in Thailand.
The company has a tie-up with China-based Jinhua Youngman Group for a strategic collaboration in four major areas, including the export of completely built up (CBU) Gen 2 and Persona for sale through Youngman’s network in China.
On the other hand, in the local front Proton had sold 156,653 units in 2010, achieving its target of 155,000 units. Exports jumped from 17,000 units in the year 2009 to 25,000 units in 2010.
The research house opined that the export plan would fill up capacity since the plants were underutilised as they have a capacity to roll out one million cars per annum.
Furthermore it approved the emphasis of growing its export markets which will increase overall production.
Proton’s collaboration with Volkswagen could start with rebadging of Passat as a replacement model for the Perdana. Proton needed platforms and engines as it could not develop an engine for every category.
The research house said that the partnership talk would revolve around contract assembly activities and platform collaboration instead of an outright sale of equity.
The tie-up with Volkswagen would still be positive as contract assembly activities and platform collaboration could lead to technological transfer thus increasing Proton’s utilisation capacity.
Furthermore, the replacement of Perdana by Passat was deemed possible due to the management’s product strategy of concentrating on core models such as Saga, Persona and Exora while entering into collaboration for non-core products to minimize investment outlay.
On the other hand, Proton would come up with a new 1.6 litre turbo-charged engine based on the current 1.6L Campro engine to deliver power that is equivalent to a 2L engine. The new engine would be fitted into the Exora which was deemed as slightly underpowered. The new engine could be introduced at the end of this year.
Furthermore, the new models for the Waja replacement model would be launched this year and would be based on the Mitsubishi GS41 (Lancer).
The research house also reported that Proton was studying the possibility of merging its manufacturing operations in Shah Alam and Tanjung Malim. The land in Shah Alam was valued at RM68.4 million, with the building housing the plant valued at RM113 million. The 143-acre plot was last revalued in September 1983. The consolidation would also help the company to achieve economies of scale.
Although the research house said that the land would be sold to interested parties, there would not be an urgent need to sell the asset as Proton was not in dire need of funds.
The company’s was valued at a target price of RM6.30 per share. The potential share price triggers were a better-than-expected sales performance, newsflow on foreign alliance and the unlocking of Shah Alam landbank.