DRB (BUY) - Remain Affected by Thailand Flood

DRB (BUY)

Remain Affected by Thailand Flood

• In line – Reported 3QFY3/12 core earning of RM79.6m, leading 9M12 to RM304.5m, achieving 77.8% of HLIB estimates, but behind consensus with 71.1%.

• Earnings was affected by the Thailand flood in Oct 2011, which had forced DRB 34% owned Honda Malaysia to shut down its Melaka assembly plant. The plant is only expected to gradually resume full production by 2Q12.
• The acquisition of Proton to be completed by end Mar 2012, and will be integrated into DRB group gradually. The acquisition will cost DRB RM3bn. Net gearing is expected to increase to ~45% from current level of 10%, while NTA/share will improve to ~RM3.17.
• Announced 1st gross interim dividend of 2 sen less 25% tax (net dividend of 1.5 sen).
• Maintain BUY with unchanged Target Price of RM3.50.

Source: HLIB Research 27 Feb 2012