Shares of DRB-Hicom Bhd surged to a three-month high after delivering earnings well above expectations. The stock climbed as much as 8% to RM1.24, valuing the group at roughly RM2.4 billion. But beneath the headline beat, analyst opinions remain sharply divided. What Drove the Surprise According to Hong Leong Investment Bank : 4QFY2025 core PATAMI: ~RM136 million FY2025 core earnings: ~RM178 million Earnings came in at 189% of HLIB’s forecast Key drivers: Strong Proton vehicle sales Improved margins Land sales contribution Proton highlights: 19,800 units sold in January 2026 (record high) Over 100,000 bookings for Saga MC3 3,000+ deliveries of e.MAS 5 EV in January Consolidation of manufacturing at Tanjung Malim for cost efficiency Money Master Take This is a classic case of headline beat vs structural sustainability . 1️⃣ Proton Is Carrying the Story The turnaround narrative rests heavily on Proton. Sales momentum is strong EV adoption gaining traction Geely reg...
Shares of DRB-Hicom Bhd surged to a three-month high after delivering earnings well above expectations.
The stock climbed as much as 8% to RM1.24, valuing the group at roughly RM2.4 billion.
But beneath the headline beat, analyst opinions remain sharply divided.
What Drove the Surprise
According to Hong Leong Investment Bank:
4QFY2025 core PATAMI: ~RM136 million
FY2025 core earnings: ~RM178 million
Earnings came in at 189% of HLIB’s forecast
Key drivers:
Strong Proton vehicle sales
Improved margins
Land sales contribution
Proton highlights:
19,800 units sold in January 2026 (record high)
Over 100,000 bookings for Saga MC3
3,000+ deliveries of e.MAS 5 EV in January
Consolidation of manufacturing at Tanjung Malim for cost efficiency
Money Master Take
This is a classic case of headline beat vs structural sustainability.
1️⃣ Proton Is Carrying the Story
The turnaround narrative rests heavily on Proton.
Sales momentum is strong
EV adoption gaining traction
Geely regional rebadging plans add growth optionality
If Proton margins sustain and EV scale improves, earnings leverage can be meaningful.
But this concentration increases dependency risk.
2️⃣ Valuation Already Above Consensus Target
Consensus target price: 89 sen
Current price: ~RM1.23
That implies the stock is trading well above average analyst valuation.
Even after the earnings beat:
Two ‘sell’ calls
One ‘hold’
One ‘buy’
The market is pricing in a stronger recovery than consensus models.
3️⃣ Non-Core Segments Still Dragging
Concerns remain over:
Pos Malaysia Bhd losses
Defence unit earnings volatility
Mobility segment discounting pressure
Kenanga Research cut FY2026 forecasts by 37% and maintained an underperform call.
That divergence signals earnings visibility remains uncertain.
4️⃣ The Real Question: Cyclical Bounce or Structural Shift?
Bull case:
Proton sales cycle + EV ramp
Manufacturing efficiency gains
Spirit Malaysia acquisition contribution
Bear case:
Heavy discounting to defend share
Chinese OEM competition intensifying
Conglomerate complexity persists
This is not a clean auto pure-play. It is a diversified group with uneven earnings quality.
Investor Framework
| Factor | Positive | Risk |
|---|---|---|
| Proton Sales | Record momentum | Market share defence needed |
| EV Launch | Early traction | Competitive pricing pressure |
| Valuation | Momentum-driven | Above consensus TP |
| Group Structure | Asset diversification | Earnings drag segments |
Bottom Line
Earnings beat triggered a momentum spike.
Proton strength is real, but group earnings remain uneven.
Stock now trades ahead of consensus valuation.
This move reflects optimism on operational recovery — but sustainability will depend on margin discipline and segment clean-up.
Comments
Post a Comment