Proton gets further left behind by the competition as the innovativeness in the automobile industry is moving rapidly, says one research analyst
Proton Holdings Bhd (5304), the country's largest manufacturer of cars, was downgraded by a slew of research firms after it ended partnership talks with Volkswagen AG (VW), Europe's largest carmaker.
The stock slid by more than 4 per cent, falling by 18 sen to close at RM4.55 a share.
"Proton gets further left behind by the competition as the innovativeness in the automobile industry is moving rapidly," OSK Research's analyst Ahmad Maghfur Usman said in a report today.
OSK cut its share price forecast for Proton to RM5.67 from RM6.94, describing the Volkswagen pullout as a "negative development" that might impact earnings.
It, however, maintained its "buy" rating recommendation on Proton, unlike CIMB Research which downgraded the stock, but kept its earnings forecast intact.
CIMB downgraded the stock to "neutral", slashing its target price to RM5.60 a share from its previous target of RM6.30 a share.
"News of the failure of partnership talks with VW is a negative surprise to us as we were banking on a favourable outcome from the partnership talks after several failed attempts," wrote analyst Loke Wei Wern in the report.
This is the second time the companies have abandoned talks, having faltered in 2007 to reach an agreement.
Last year, Proton also talked of possible technical alliances and platform sharing plans with Renault SA and India's Hero Group.
India's Business Standard reported late last month on Proton finalising plans for the Indian market.
While the EMAS concept car shown at the Geneva show was a hybrid, Proton will use the platform to develop an entirely new small car for markets like India and China, the daily reported.
"We presented the EMAS as a global concept car, which will be adopted for the new Proton model in the small car segment, with focus on India, China, Asean and the Middle East," it quoted Proton's managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir as saying.