KUALA LUMPUR: CIMB Equities Research is retaining its earnings projections for aProton Holdings Bhd as the car maker will be releasing its 1QFY11 results on Monday, Aug 23.

“The stock remains a Neutral. Also intact is our target price of RM5.15 as we continue to apply a 10% premium to its five-year historical P/BV of 0.5 times,” it said in a research note.

The Edge Weekly reported that Proton’s unit Lotus Group will need cash injection of close to RM500 million over the next two years to develop new models. Proton’s management also plans to issue new Lotus shares to investors to raise another RM420 million.

CIMB Research said although the RM500 million cash injection is vital in helping Lotus’s management turn around the company, it is negative for Proton as it is a drain on its cashflow.

“But we take a positive view of the emergence of new shareholders as it would ease Proton’s burden of financing Lotus while allowing Proton to continue tapping Lotus’s expertise and technology,” it said.