PROTON HOLDINGS A 'BUY' AFTER SECURING US$439 MILLION SYNDICATED LOAN

KUALA LUMPUR, April 18 (Bernama) -- Proton Holdings Bhd is still a "buy" after the Malaysian automotive manufacturer secured a RM1.33 billion (US$439.683 million) syndicated loan deal from six lenders, said MIDF Research.

"The amount of financing secured by Group Lotus is within our expected debt-to-equity ratio of 0.3 times level.

"However, we understand its capital expenditure total commitment for the five-year turnaround plan is 480 million pounds (RM2.4 billion), which the secured funding, captured about 56 per cent of its total commitment," MIDF Research said in a research note Monday.

It did not rule out the possibility of a further fund raising exercise via a rights issue to meet the group's total capital expenditure commitment.

The research house is also of the opinion that the local vehicle sales volume may be hurt by the auto supply disruption due to Japan's recent twin disasters.

"We have reduced our total industry volume (TIV) forecast by three per cent to 610,324 units from 629,200 units for 2011.

"Following the downward revision, we have reduced Proton's 2011 and 2012 forecasts by 8.6 per cent and 1.2 per cent respectively," it said.

MIDF said even after its downward revision for the group's earnings
forecast, its target price is still maintained at RM5.20 per share.
(US$1=RM3.03)

"The stock retraced by 31.4 per cent since its peak price in September 2010. We believe concerns over the Group Lotus turnaround plan has already been factored into its share price," it added.
-- BERNAMA