DRB-HICOM to redevelop Proton’s Shah Alam plant

Post date: Jun 07, 2013 10:35:47 AM

Jun 04, 2013

DRB-HICOM Bhd plans to redevelop Proton’s manufacturing complex in Shah Alam into an integrated development that will generate around RM4 billion in gross development value (GDV).

According to Previn Singhe, founder and chief executive officer of Zerin Properties, a GDV of RM4 billion is achievable, depending on the density and types of properties that DRB-HICOM plans to build.

He said a RM4 billion GDV would net DRB-HICOM a margin of 20 to 30 per cent, or between RM800 million and RM1.2 billion.

This is about 20 to 30 per cent of what DRB-HICOM paid for national carmaker Proton Holdings Bhd.

DRB-HICOM, controlled by the Albukhary Foundation, took over and privatised Proton in a deal worth RM3.02 billion early last year.

Proton owns the 100ha complex, which houses its main factory, a smaller multi-vehicle plant, a casting plant as well as an engine machining and assembly building.Based on book value, the land and building are worth some RM700 million. Commercial land in Shah Alam is currently selling at more than RM100 per sq ft.Previn said DRB-HICOM may either develop the land in a joint venture with Proton, or buy it outright from the carmaker.“The best thing is for Proton to sell the land to DRB-HICOM. It would be a great way for the carmaker to monetise its assets.Proton will have cash to expand and compete in the global level,” he told a popular English daily.Mercury Securities head of research Edmund Tham thinks DRB-HICOM may build several residential blocks, office towers and retail space.He said DRB-HICOM can rake in a profit margin of between 40 and 50 per cent if the project has high-end product offerings.Sources close to DRB-HICOM said it is planning to relocate the complex in Shah Alam to Proton City in Tanjung Malim, Perak.

"The idea to redevelop the site is to boost DRB-HICOM's property development division and future earnings. The move to Tanjung Malim will also help cut costs and make Proton more efficient in production as it consolidates its business," said a source.

The property development division is headed by Datuk Mohamed Razeek Md Hussain, former chief executive officer of Malaysian Resources Corp Bhd.

The division's current landbank has GDV worth around RM2 billion.

Razeek was not available for comment on 3 June.

Proton City, an integrated project worth more than RM11 billion, started operations in 1996. The 1,600ha project is developed by Proton City Development Corp Sdn Bhd, a 60:40 joint venture between DRB-HICOM and Proton.

Proton City comprises the Proton plant, the 120ha Proton Vendor Industrial Park, Universiti Pendidikan Sultan Idris' main campus, and residential and commercial properties.

- Business Times