KUALA LUMPUR: AmInvestment research has upgraded DRB-Hicom Bhd to a buy rating with a higher fair value of RM3.18 as Proton regains traction in the local automotive space.

In a note published today, the research house said it is seeing a shift in the general consumer's preferences towards cheaper alternatives, which would benefit national marques Proton and Perodua. 

"Market share is expected to expand due to shift in consumer preference towards affordable vehicles with value-added features," it said.

It noted that Proton has captured a year-to-date market share of 14.7%, which comes closer to Honda's 14.9%. 

AmInvestment expects Proton to take the second spot in market share behind Perodua by the year-end due to the strong demand for the X70, Iriz and Persona as well as the upcoming Saga 2019 facelift.

The research house also expects the production of the X70 in the Tanjung Malim plant in 2H19, to result in a price reduction with the introduction of the CKD. 

"We should also see better monthly sales and delivery numbers should the localization plan takes off; which is positive for Proton’s turnaround plan. 

"The group guided that the local content of the X70 will start with 10% will progressively increase to 80% by 2023," it said.

Furthermore, AmInvestment said the X50 will be introduced in October 2020 as a CKD version while an unnamed model, expected to be a Geely-inspired seven-seater MPV, is in the pipeline.

"These models will be key in shaping the local automotive sector as they come in very attractive price tags and are essential in aiding Proton in its turnaround plan," it said.