Automotive (NEUTRAL)

Perodua to Produce Sedan?

• According to Managing Director Datuk Aminar Rashid Salleh, Perodua have started a joint feasibility study with partners Daihatsu and Mitsubishi to produce sedan cars.
• The news on Perodua’s intention to produce sedan cars has emerged for quite some time.
• Nevertheless, we do not expect the plan to materialize at least for another 2-3 years, since the plan is still at preliminary stage and depending on government’s approval.
• Should Perodua commence with the plan in penetrating the sedan car market, it is likely to capture further market share in Malaysia at the expense of Proton (DRBHCOM).
• Car parts and components manufacturers are likely to enjoy further sales from Perodua new car development.
• Forecasts remained unchanged pending further concrete development by Perodua.
• We maintain NEUTRAL on the sector. Top pick: DRBHCOM with BUY call and TP of RM3.43.

Source: Hong Leong Investment Bank Research - 9 August 2012