- It was reported in the press yesterday that DRB-Hicom’s
Proton has signed an agreement to buy all engine technologies and knowledge
developed by Petronas since 1997 at RM63mil.
- Proton will have immediate ownership of a more powerful
yet fuel-efficient, naturally aspirated and turbocharged 2.0 litre- and 2.2
litre-engines. To be exact, Proton is taking over seven engine technologies
with 117 technology patents from Petronas.
- To recap, Petronas in 1997 had begun developing Malaysia’s
first commercial engine project called the Petronas E01. This was a
collaboration between Petronas engineers and development partners as a result
of the former’s involvement in Formula 1.
- In fact, back in 2006, Proton had signed an MoI with
Petronas to develop larger capacity engines and with a view to explore the
development of Petronas engines for mass
production and for these engines to be fitted into Proton’s models. The plan
was to use them for Proton’s 1.8-2.2 litre range but this did not materialise.
- Management had indicated that the updated version of the
engine is currently being tested in Proton Exora and Preve models and it is
looking at rolling out new Proton models fitted with engines developed by
Petronas in 1Q2013.
- We are not ruling out the possibility of this engine being
fitted into Proton’s models in the pipeline, namely Preve hatchback and Exora
facelift model.
- Apart from good value for more-than-decent engine
technology, E01 engine produces similar power to Honda K20A performance
standards. There will be additional income for DRB given that Petronas had
earlier signed a deal with China’s Nanjing automobile to start mass production
of the NE01 engines in 3Q2013. However, details are sketchy at this juncture.
- We reaffirm our BUY rating on DRB-Hicom, but with our fair
value and estimates placed under review.
Source: AmeSecurities
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