DRB-HICOM seeks revenue balance

By Shahriman Johari

DRB-HICOM Bhd (1619) plans to improve the balance of revenue contribution from its services, automotive and property businesses over the next five years as it seeks to expand.

Currently, its motor vehicle business makes up some 57 per cent of revenue, followed by its banking, insurance and power plant maintenance services at about 40 per cent.

Property makes up less than 2 per cent of revenue now, but DRB-HICOM wants to boost this to 20 per cent in five years.

"I never like to put all my eggs in one basket," group managing director Datuk Seri Mohd Khamil Jamil told reporters at a briefing in Kuala Tahan, Pahang, yesterday.

DRB-HICOM, controlled by Tan Sri Syed Mokhtar Al-Bukhary, reported net profit of RM472 million in the financial year to March 31 2010, 29 per cent down from the year before mainly because it gained almost RM600 million from an asset sale last year. Revenue hit a record of RM6.3 billion.

The group plans to launch properties with a total gross development value of RM9 billion over 10 to 15 years. This will be a mix of residential and commercial properties. It has some 607ha near Mount Austin, Johor, which will be developed into a new township. "There are still pockets of land in DRB which are very prime," Mohd Khamil said. They include a piece of land in Taman Wahyu in Jalan Tun Razak, Kuala Lumpur, and tracts of land in Shah Alam, Selangor. This month, it plans to launch Glenmarie Gardens, a high-end bungalow project.

As for its motor vehicle business, it aims to sign a definitive agreement with Europe's Volkswagen AG (VW) next month. VW had signed in August a memorandum of understanding with DRB-HICOM to produce VW cars from 2012 at the group's plant in Pekan, Pahang. "The final negotiations are going on well and the parties are finalising the terms," he said. Eventually, the deal may include the export of VW cars to Asean countries, among other things.

DRB-HICOM is also still looking for a foreign partner to buy 30 per cent of its Islamic lender, Bank Muamalat Malaysia Bhd. It holds 70 per cent of the bank currently. It was in talks with five foreign parties and one local firm, but the talks fell through amid the global financial crisis last year.

Asked about the weak performance of its stock, Mohd Khamil said it could be due to the fact that the group was too diversified. It is also classified under the industrial sector on Bursa Malaysia although services have become a big part of its business. "If shareholders understood the nature of our business, the share would definitely escalate and show their true value," Mohd Khamil said. Apart from Syed Mokhtar with 55.92 per cent, its other main shareholders are the Employees Provident Fund with 9.11 per cent and Khazanah Nasional Bhd with 5.13 per cent, according to its 2010 annual report.

Taken from here...