PETALING JAYA: Reports about DRB-Hicom Bhd to be potentially privatised which caught the industry off guard have been brushed off as only rumours by group managing director Datuk Seri Mohd Khamil Jamil.
The market was set abuzz by the possibility of tycoon Tan Sri Syed Mokhtar Al-Bukhary taking the conglomerate private on a stand-alone bid of between RM3.50 and RM4 per share.
At the launch of the new Suzuki Swift, Khamil told the media: “These are only rumours. I would like to clarify that we at DRB-Hicom are also unaware and caught by surprise. There has not been any proposal on the privatisation as alleged in the papers.
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| Khamil |
Responding to a question on the shares being undervalued, Khamil said that DRB-Hicom shares were good based on the company's fundamentals like its balance sheet and net asset value.
DRB-Hicom shares rose seven sen, or 2.66%, to RM2.70 yesterday following the news. The reports also noted that DRB-Hicom was looking to list the merged Proton Edar and EON Bhd, the distributors of Proton cars, as part of its plans to create an “Asian car” that would make Malaysia the Volkswagen vehicle production hub.
The group filed an announcement with Bursa Malaysia reiterating that it had not been approached or notified by Syed Mokhtar of any privatisation plan of DRB-Hicom.
While it had announced the rationalisation exercise of the Proton business between Proton Edar and EON Bhd, it said the listing of the Proton distribution business to unlock the values of the merged entity was only one of the possible scenario.
“However, it was not part of the plan to de-list DRB-Hicom.”
DRB-Hicom added that the proposal was still at very preliminary stage and that the company would make the relevant announcements in time.
Analysts who responded to the newsflow cited the privatisation, if it came true, was positive for DRB-Hicom. CIMB Research analyst Lucius Chong said in his report that the privatisation would make sense because DRB-Hicom was trading below its net tangible assets (NTA).
“Any such move would facilitate its current restructuring programme to sell non-core assets and re-list individual automotive businesses, first the distribution and manufacturing arms (with the only Volkswagen joint venture in Asean) separately and then Proton (potentially with a foreign partner),” he said.
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| Syed Mokhtar |
Wong said that if the privatisation were to materialise at the indicative range, investors should accept the offer since it was close to CIMB Research's realisable net asset value (RNAV) of RM4.06 per share.
The group has taken several major measures to tidy up its national car manufacturing business, unlocking the value in its assets along the way. Among them are improving its production facilities in Tanjung Malim to make way for other developments like residential or a potential RM500mil sale of its 250-acre real estate in Shah Alam.
The group plans to invest RM1bil in the next five years and make Tanjung Malim the main Proton car manufacturing centre, although the Shah Alam plant will still be in operations. Its Tanjung Malim plant is running at around 40% capacity producing 150,000 cars per annum. It can be expanded to produce up to one million cars per year.
DRB-Hicom's property development arm is also collaborating with Pos Malaysia to work on some of the latter's land. Pos Malaysia has land in Brickfields, Kelana Jaya and Batu Pahat.
To spearhead its plans, DRB-Hicom has also hired market-familiar corporate figures such as Datuk Seri Che Khalib Mohamad Noh as its chief operating officer (COO) of finance, strategy and planning in July. Che Khalib was the CEO of local energy giant Tenaga Nasional Bhd.
The other corporate captain at DRB-Hicom is former Malaysian Resources Corp Bhd CEO Datuk Mohamed Razeek Md Hussain Maricar, who assumed position as COO in September.
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