Reflections on Volume

Big volume without further upside equals distribution
Big volume without further downside equals accumulation

Volume tends to peak at turning points
Volume often precedes price movement
Volume is a relative study

Saturday, December 11, 2010

DRB-HICOM set to seal deal with VW

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.


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.

Read more: DRB-HICOM set to seal deal with VW

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