DRBHcom ... Dec10

DRB-Hicom has been off the radar screens of investors due to its rather expansive business interests in the automotive, insurance, banking, property and services sectors.

There is also the fact that it is owned by Syed Mokhtar, whose past corporate moves were said to have not endeared him to minority shareholders.

Its auto division was expected to grow further with the signing of a memorandum of understanding (MoU) between DRB-Hicom and Volkswagen.

DRB-Hicom is a key distributor for Proton, Honda, Mitsubishi and Audi cars locally. HwangDBS added that sales of Volkswagen vehicles could grow exponentially as DRB-Hicom had already sold 4,943 completely built up (CBU) units for the first 10 months of this year, up 92.9% from a year earlier.

In addition to its commercial vehicle business, DRB-Hicom also supplies military vehicles to the government via DRB-Hicom Defence Technologies (Deftech).

Meanwhile DRB-HICOM has inked a MOU on the possibility of manufacturing Kamaz trucks in Malaysia for the local market as well as in Asean It is seeking to strike a firm deal with one of Europe's largest truck makers to assemble and distribute its heavy-duty trucks in Malaysia.

The group sealed a memorandum of understanding (MOU) with Russia's Kamaz INC for the purpose. If materialises, DRB-HICOM will have the rights to also distribute Kamaz's right-hand trucks to the Asean region. The MOU will pave the way for a feasibility study as well as detail costing studies in respect of setting up the facilities in Malaysia.

The initial assembly of the Kamaz trucks at its Pekan, Pahang, plant could begin in 12 months. The MOU was valid for four months. Kamaz, 11 per cent owned by Germany's Daimler, has over 50 per cent share of the Russian market .

A key catalyst is the conversion of the letter of intent from the Ministry of Defence for 257 AV 8x8 armoured vehicles worth an estimated RM8 billion.

Apart from DRB-Hicom’s automotive division, its service division comprises Bank Muamalat, KL Airport Services and cash-generating concessions Rangkai Positif and Alam Flora.

Alam Flora would benefit from further privatisation of the domestic-waste industry, while Rangkai Positif should gain from more operations and maintenance works with the eventual expansion of the Tanjung Bin (power station) by another 1,000MW.

DRB-Hicom could gain some RM600 million from its sale of a 30% stake in Bank Muamalat to the Al Baraka Group of Bahrain, which was seeking to expand regionally.

DRB-Hicom said it had no knowledge of any privatisation proposal.

For the six months to Sept 30, DRB-Hicom’s net profit more than doubled to RM289.97 million or 15 sen per share, from RM109.41 million a year earlier. Its revenue rose 1.58% to RM3.2 billion from RM3.15 billion.

The automotive arm contributed RM1.84 billion or 57.4% to group revenue, while its services business contributed RM1.31 billion or 40.9%, followed by its property business with RM53.8 million or 1.7%.