By Business Times (Francis Fernandez)
DRB-HICOM Bhd is scheduled to sign a definitive agreement on December 21 with Volkswagen AG, Europe's largest carmaker, to assemble VW cars in Malaysia.
The cars will be assembled in Pekan, Pahang, for local and Southeast Asian markets.
"Tentatively, it is scheduled for December 21 with the signing ceremony being held either in the KLCC area or at DRB-HICOM's (1619) operational headquarters in Glenmarie, Shah Alam," said the source.
It is understood that DRB-HICOM's top officials from its automotive divisions are currently abroad for the final leg of negotiations with VW.
In August, DRB-HICOM signed a memorandum of understanding with Germany's VW to assemble and manufacture Volkswagen vehicles in Malaysia.
An agreement with VW will help boost business and raise its profile among investors further. Although a big chunk of income comes from stable businesses like Islamic banking, insurance and power plant maintenance and plans to expand its property unit, its share price is still well below its net asset value of over RM2.
DRB-HICOM shares closed 9 per cent higher at RM1.80 yesterday.
In August, it was reported that minority shareholders voiced their displeasure at the company's annual general meeting over the undervalued shares.
As a result, the company said it plans to beef up investor relations (IR) activity.
"I do understand the anxiety of the shareholders and the public ... the current share price does not reflect the actual value of the company, which is actually worth more," group managing director Datuk Seri Mohd Khamil Jamil reportedly said after the AGM.
Yesterday, HwangDBS initiated coverage on DRB-HICOM with a RM3.55 target price.
The research house said DRB-HICOM is the cheapest conglomerate in the country with a net gearing of 0.3 times.
"With efforts to be more investor-friendly now, we expect a significant re-rating from its bargain basement valuation of 5.5 times 2012 financial year's earnings per share," Hwang said in the report.
The research house added that a key catalyst for DRB-HICOM is the conversion of a letter of intent from the Ministry of Defence for 257 AV 8x8 armoured wheeled vehicles, worth about RM8 billion.
Malaysian Billionaire :
* With the failure of partnership between Proton and Volkswagen VW, VW is set to get DRB-HICOM to assemble Volkswagen cars in malaysia. So izzit the right time to get some DRB-HICOM shares and a Touareg in a cheaper price tag in the near future?
