What is the weaknesses of proton holdings berhad?
PROTON was incorporated on 7 May 1983 with three primary
national policy objectives: To spearhead the development of
component manufacturing industries, to acquire and upgrade
technology and industrial skills within the automobile
manufacturing industry and to strengthen the international
competitiveness of Malaysia's industrial capability. The failure by
Proton to find a foreign partner is a warning signal that it is no
longer a competitive and economically viable entity with current
market situation and questionable management decisions that causes
Proton to lose money when other finds profits. Therefore, Proton
Holdings Berhad needs to consider a foreign partnership to further
improve on its quality and service to the buyers. Khazanah
Malaysia, the Malaysian government's investment arm, holding about
42.74% of Proton, followed by the Employees Provident Fund with
15.4 per cent and Petronas with 7.9 per cent. Price/Earnings: Not
Meaningful Price/Sales: 0.3x (2/5 points) Price/Book: 0.4x (2/5
points) Price/Cash Flow: Not Meaningful TEV/Sales: 0.1x (3/5
points) A merger has its advantages - economies of scale, market
domination, etc. but an enlarged national car company could create
many duplications i.e. product, dealers network, vendors etc.
Proton is finding it tough to trim its network of suppliers and
distributors. National car company Proton Holdings Berhad once
dominated with a majority share in the market. It has since not
only lost that majority, its sales in unit terms have even dropped
below that of unlisted Perusahaan Otomobil Kedua Berhad (Perodua).
UMW Holdings Berhad is the biggest in the sector, with a market
value of RM5.9 billion, compared with Proton's RM1 billion.
Although, UMW has an important oil and gas division, it derives
most of its profits from its Toyota division, the most profitable
in the industry. In contrast, Proton reported a loss of RM75
million in the October - December quarter last year. It is exceeded
in market value by Oriental Holdings Berhad (RM2.3 billion) and
DRB-HICOM Berhad (RM1.4 billion), both of which are diversified
motor-based groups. In my conclusion, Proton should continue to
seek strategic alliances and further expand its market globally due
to the termination of talks with Volkswagen AG in the year of 2007.
In my point of view, Proton needs to basically integrate more into
the global supply chain and the global market. Basically, we have
not attained the kind of export penetration projected when the
company was established. Global motor vehicle industry was
undergoing a consolidation and Proton should be part of this trend.
We need to be part of the bigger family in a way that works for us.
Till date, we did not have any clarification regarding The Public
Accounts Committee (PAC) submit its report on Proton Holdings
Berhad's sale of Italian motorbike manufacturer, MV Augusta to GEVI
s.p.a at one euro to Parliament because Proton had acquired a 57.75
percent stake in MV Augusta in December 2004 for 70 million euro
(RM367.6 million).
