The Star: Minor impact on DRB-HICOM if GM exits JV

I don't think that DRB-HICOM will stock prize will be affected by the move.. But I see the volume for the past few day a high...so...more people are focus on this share...

PETALING JAYA: DRB-HICOM Bhd’s bottomline will not be significantly affected if its joint-venture (JV) partnership with General Motors Corp (GM) ends on Sept 30, analysts said.

There has been speculation that the partnership between the two has been on the rocks but DRB-HICOM Monday denied via a statement that the partnership had been terminated.

GM, on the other hand, is said to be in the middle of a strategic review of its operations and business in the Malaysian market with on-going discussions but had not signed agreement with any companies yet, according to Bloomberg.

GM was believed to be talking to five parties for a new JV or partnership that included the Naza Group. DRB-HICOM and GM’s partnership was incorporated via a JV company, Hicom-Chevrolet Sdn Bhd, with GM Asia Pacific owning a 51% stake and DRB-HICOM the remaining 49%.
Among the models marketed by Hicom-Chevrolet is the Chevrolet Captiva sports utility vehicle

The 10-year partnership that sees Hicom-Chevrolet as a distributor of Chevrolet cars in Malaysia is renewable every year.

According to an industry analyst, if the agreement is not renewed, the impact to DRB-HICOM would not be overly detrimental based on the sales of Chevrolet cars in the country.

As at end June, Hicom-Chevrolet’s sales stood at 60-70 units per month with around 1,000 cars sold last year.

“The annual revenue for the sales of Chevrolet cars is close to RM1bil and if the speculation is correct, DRB-HICOM may only lose RM15mil to RM20mil in contribution at most to its annual bottomline,” he said.

Another analyst from a local research house said DRB-HICOM had many other car brands in its portfolio, including Honda, with sales of the Japanese car doing well.

“Its Honda sales stood at around 3,000 to 4,000 units per month for the past seven months,” she noted. DRB-HICOM’s other international joint venture partners include Isuzu and Suzuki.