Another good news on DRB?

DRB-HICOM may assemble 2,400 VW cars

By JEEVA ARULAMPALAM

PETALING JAYA: The collaboration between DRB-HICOM Bhd and Volkswagen AG to assemble selected models of Volkswagen cars at the former’s Pekan plant may see the initial assembly of some 2,400 units per annum, say analysts.

“It’s difficult to say how many units will be assembled initially as they have yet to indicate. But we could see some 200 units being assembled on a monthly basis before a further ramp-up,” a motoring analyst told StarBizWeek.

Potential models that could be assembled in the Pekan plant include either the Volkswagen Polo or GTI, say analysts.

DRB-HICOM said in a press invite issued yesterday that there would be a signing ceremony on Tuesday between both parties on the collaboration and licence agreement to assemble selected models of Volkswagen cars at DRB-HICOM’s automotive complex in Pekan.

The signing ceremony will be witnessed by Prime Minister Datuk Seri Najib Tun Razak.

Both carmakers first signed the memorandum of understanding in August, which will also strengthen Volkswagen’s existing sales activities and market presence in the country.

Najib had said then that three new Volkswagen models were expected to roll out of the Pekan plant. He added that the assembly of completely knockdown vehicle components of the renowned German brand would see the roll-out of the vehicles from the plant by the end of the first quarter of next year.

Volkswagen had requested for incentives from the Malaysian government to make DRB-HICOM’s production plant here its export base for the Asean region.

A local bank-backed analyst said that while the initial start-up of this assembly would be loss-making, its potential margin outlook is good.

DRB-HICOM also sells Audi cars, a brand under Volkswagen, Mitsubishi vehicles and Modenas motorcycles. It also has a stake in the local manufacture and assembly of Honda cars in the country.

The company, which has been largely reliant on its automobile division accounting for 57% of revenue in its previous financial year, said recently that it planned for larger contribution from its services and property divisions in the medium term.

It anticipates growth in services through 70%-owned Bank Muamalat Bhd and a number of concessions it owns along with new property launches to balance the scales in contribution to the group. DRB-HICOM’s plan is for a more balanced contribution among the segments of the group over the next five years.

Update

Small investor like us might think that DRB-HICOM has increased too much to the extent where it should stay at current level for some time. Therefore, some of us might dispose the shares in DRB and invest in other counter.

I bought this counter some time ago. And now i have 2 options:-

1) Dispose and realise the profit and invest in other counter.

2) Keep it as a long term investment.

There are rumours saying DRB might take private at 2.50 or 2.70. Famous blogger even say that this is a great opportunity for Syed Mokhtar. IF you had keep an eye on this counter, you should have notice the company is coming up with series of good news such as mou with russian truck manufacturer, DRB may assemble 2400 vw cars(latest) and so what's next? PRIVATISATION?? (MAYBE? WHO KNOWS?) lol

Although the company has already announced that they are unaware of the privatisation plan, it is still sound fishy. The latest changes in the code on takeovers and mergers should be able to stop them from denying if they really plan to do so because Potential offerors will be prohibited from making a takeover offer within a period of six months should they deny making an offer. This is really a good change that will protect minority investor like us.

As i mention above, there are 2 options for me now. Apparently i have decided to hold DRB for medium -long term and see how it goes. Strong quarterly result+ coming bull run should be able to give us a pre chinese new year angpau(provided u choose the right counter). Besides that, i have increased my investment on this counter this week at the price of $1.75-1.80.

In conclusion, a small investor like us should have invest in a good fundamental company rather than highly speculative counter. Moreover, we also have to make sure they company is expanding and doing something then we will have a better chance to get capital appreciation. Today is 18 Dec 2010. Invest at the right time is important. In my opinion, it is the right time so the next step will be "which is the right counter?" You decide!

I maintain buy call on DRB-HICOM below $1.92

BUY AT YOUR OWN RISK!!!!!! :)