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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 15 Jan 2021, 10:38 AM

 

DRB-Hicom - Turning Around

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DRB-Hicom (DRB) reported a net profit of RM47.5m in 3QFY20, compared to a net loss of RM306.1m in 2QFY20, mainly due to improved performance from all sectors and higher contributions from its share of results from JV and associates. Its YTD 9MFY20 core net loss narrowed to RM205m, making up 143% and 184% of our and consensus’ full year core net loss of RM143.5m and RM111.4m respectively. We believe the positive momentum to continue in the coming quarter as we expect vehicle sales to increase due to sales tax exemption until December 2020 and better performance from Postal & Logistics due to improved tariff rate in Pos Malaysia. We are keeping our forecasts unchanged. No dividend was declared during the quarter. We maintain our Neutral call on DRB, with unchanged SOP-target price of RM2.00.

  • Automotive division reported a pre-tax profit of RM130.3m in 3QFY20, compared to a pre-tax loss of RM305.2m in 2QFY20. The introduction of sales tax holiday by the Government had contributed positively to overall vehicle sales with 54,556 units sold during the quarter (+131% QoQ). Positive sales momentum is expected to continue in the coming quarter following the sales tax holiday ending on 31 December 2020. Meanwhile, its Defence and Aviation segment reported better contribution (+64% QoQ) due to higher percentage completion of AV8. YTD 9MFY20, DRB reported segmented pre-tax loss of RM265.3m.
  • Services division. During the quarter, revenue from its services division improved 5% QoQ to RM918.7m in 3QFY20, mainly from postal & logistics (Pos Malaysia) and banking sector (Bank Muamalat). Overall, its Services sector reported a pre-tax profit of RM50.4m, compared to a pre-tax loss of RM4.1m. For 9MFY20, it reported a marginal pre-tax loss of RM5.5m.
  • Properties division. Improved revenue for Properties sector (+32% QoQ) was mainly derived from construction related projects (i.e. Media City Development) with higher percentage of completion due to reopening of business activities in the current quarter. This resulted to a segmented pretax profit of RM10.5m. For 9MFY20, it reported a pre-tax profit of RM16.9m.

Source: PublicInvest Research - 27 Nov 2020

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