Exora will help bolster Proton: MIDF Research

SHARES of Proton Holdings Bhd (5304) may find temporary support from the launch of its latest model, the Exora multi-purpose vehicle.

"During the current testing times, the Exora may be the one to push Proton onto a higher level and spark the turnaround that is long overdue," MIDF Research said in a report.

It has a target price of RM2.90 for Proton. The stock rose 6.6 per cent to close at RM2.40 yesterday.

The Exora is set to be launched by the Prime Minister today. Bookings so far stand at 2,500 units which is below MIDF's expectations.
However, it expects this to improve when consumers get the chance to view and test drive the MPV.

Proton's stock has been rising almost 40 per cent since March 31, compared with a 7 per cent gain in the broader market over the same period.

"The speculation of a merger with Perodua seems to linger on and coupled with the launching of the Exora, near-term price catalysts seem to be in place," MIDF said.

Speculation of a merger between Proton and Perodua, which is nothing new, will have to be taken with a pinch of salt, MIDF added.

This is because such a deal would be a messy affair. Proton's biggest shareholder is Khazanah Nasional Bhd with 42.7 per cent, followed by the Employees Provident Fund with 15.4 per cent and Petronas with 7.9 per cent.

Perodua has five major shareholders with UMW Corp Sdn Bhd holding the biggest chunk at 38 per cent.

A merger would result in the new company controlling 60 per cent of the local market.

"A merger has its advantages - economies of scale, market domination, etc, but an enlarged national car company could create many duplications i.e. product, dealers network, vendors etc," MIDF said. As it is, Proton is finding it tough to trim its network of suppliers and distributors.

However, Proton could emerge as the winner if it ends up controlling the merger because that would mean the elimination of a close rival.