PROTON sees increasing exports

KUCHING: Proton Holdings Bhd (Proton) expects its export market to increase two-fold up to 40,000 units from just over 20,000 units in the financial year 2010 (FY10). This will be driven mainly by the Chinese market, where Proton currently has a partnership arrangement with a local company, Jinhua Youngman Automobile Group Ltd (Jinhua).

Specifically, Jinhua was targeting sales of 30,000 units in China from less than 10,000 last year.

Meanwhile, according to AmResearch Sdn Bhd (AmResearch), there were possibilities of this target being pushed higher.

To note, Proton derived its revenue mainly from royalties and complete knock down (CKD) kit sales to Jinhua. Investment in assembly plants and showrooms were borne by the China company. Currently, Jinhua only sells the Gen-2 model in China.

In addition, the new CKD version of the Gen-2 would receive upgraded facelifts, changes mostly on the front end with new headlamps, bumpers and grilles including the Lotus Europestar badge, new rear bumpers and tail lamp designs.

The financial year 2011 (FY11) would be the maiden year where Proton would sell its model in CKD form to Jinhua. Prior to this, sales in China were in completely built-up (CBU) form, hence the expected upswing in sales volume as selling price could be lowered by 13 per cent to 20 per cent in CKD form, added the research firm.

On the other hand, the group was also expected to introduce one new model and two to three facelifts of existing models in FY11.

The new model would be a Waja replacement, which would be a rebadged version of Mitsubishi’s Lancer model.

AmResearch expected the Waja replacement to lift Proton’s overall margins, although margins for the Waja replacement would be lower than the Exora; it will nonetheless be higher than the existing Saga model, which was estimated to generate five per cent to seven per cent in operating margins.

Besides the Waja replacement, a facelift of the Saga model (which had been three years in the market) would be launched nearing the Raya festivities in September while an updated variant of the Exora (most likely equipped with a Campro Turbo engine) would also be launched by the end of the financial year.

Meanwhile, a Perdana replacement would likely be introduced in first quarter of next year. This was an entirely rebadged model, which was similar to the Waja replacement but in partnership with a different original equipment manufacturer (OEM).

Financially, Proton sales in May outperformed the industry at plus 25 per cent month-on-month. This was mainly due to the fact that some of the delayed deliveries in April were pushed into May.

The research firm further stated that bookings remained broadly stable with an approximate 15,000 units for the Exora and Persona collectively. AmResearch did not rule out any possibilities that the strong bookings earlier in the year were actually inflated by carry over demand from buyers opting for new-year registrations.

Based on the 2010 general outlook, the research firm pegged Proton’s target price at RM5.00 per share.


- by Borneo Post