Monday 27 May 2024
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KUALA LUMPUR (September 26): The newly-launched Proton Iriz has been said to be a “game-changer” that would benefit DRB-Hicom Bhd’s unit Proton Holdings Bhd.

Since its acquisition in 2012, Proton has weighed down the conglomerate’s  overall performance as the national carmaker has failed to break even.

However, the launch of the Proton Iriz yesterday may see the tables turning for Proton, as analysts say there is a potential for the new car to be successful in the domestic market.

In a note today, Public Investment Bank Bhd (PublicInvest) said the Proton Iriz may be a catalyst for Proton to turn profitable. The research house said that the Iriz will give its rival, the Perodua Myvi, a good fight.

The research house said that the Iriz’s key selling point is its focus on safety, with key features including electronic stability control, anti-lock braking system and a minimum of two airbags in each of its variants.

“With a more competitive model in the high volume B-segment category such as Proton Iriz, we believe the new car will be a ‘game-changer’ for Proton to achieve the economies of scale necessary for the auto-maker to turn profitable,” wrote the research house.

PublicInvest has maintained “outperform” on DRB at RM2.25, with a target price of RM3.20.

Meanwhile, RHB Research Institute Sdn Bhd said that the Iriz will be able to achieve domestic success, and believes that Proton will gradually overcome the market’s long-term prejudices on the group.

Quoting the management of Proton, the research house said that the Iriz already has 17,000 bookings in hand.

“It will be interesting to see how many bookings actually translate into actual vehicle deliveries given the high 60% financing rejection rate for the purchase of cars in this category,” said RHB.

The research house added that the sales of the new model will provide a financial base to invest in the development of other models, as Proton’s two best-selling models, the Exora and Saga, are five and seven years old respectively.

However, RHB said that Proton still has other hurdles to overcome, even if the Iriz is a success.

“A key challenge is raising economies of scale and consolidating its manufacturing assets in Tanung Malim, which will likely facilitate the redevelopment of the Shah Alam plant.

“The export potential of the Iriz will also be important, although the penetration of developed markets will likely be complicated by Euro-6 emissions regulations,” said the research house.

RHB keeps a “buy” rating on DRB, with an unchanged target price (TP) of RM3.20 and said that the potential sales success should “support an interim re-rating of DRB’s share price back to at least RM2.50”.

At 11.20am, DRB rose 1 sen or 0.44% to RM2.26, bringing its market capitalisation to approximately RM4.37 billion.

 

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