KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB Research) remains positive on DRB-Hicom Bhd's outlook on strong automotive sales growth potential, leveraging the attractive model line-up from Proton.
The research house said DRB-Hicom would continue strengthening its automotive position in Malaysia as the company focuses on ramping up production to meet the high order backlogs.
The firm expects continued strong performance for the segment into the financial year 2023 (FY23), mainly driven by strong demand for Proton models.
"Proton is anticipated to introduce two new attractive models in FY23.
"The increasing production volume also bodes well for the company's automotive supply chain.
"We expect Proton to step up the pace on its export program in 2022–23 to Africa, South Asia, and the Southeast Asia region," it said.
Meanwhile, HLIB Research said DRB-Hicom reported a core net profit of RM147.6 million for the third quarter (Q3) 2022, further accelerating its nine-month financial year 2022 (9MFY22) result to a net profit of RM244.9 million.
HLIB Research deemed the results above its and consensus full-year forecast at 93.5 per cent and 124.8 per cent.
"This is mainly due to stronger-than-expected sales and margins from the automotive segment and contributions from joint venture (JV) associates.
"We maintain Buy on DRB-Hicom with a higher target price of RM2.24," it added.