Information on the Target

PROTON, a national car manufacturer in Malaysia, is on a strategic path to enhance its position within the automotive industry. In collaboration with AAPICO Hitech Public Company Limited, PROTON is initiating the production of critical automotive components through its subsidiary, Advance Vehicle Engineering Global Sdn Bhd, which will be rebranded to Aapico Avee Sdn. Bhd. Following a formal agreement reached on June 26, 2023, AAPICO is set to acquire a 60 percent stake in AVEE Global, leaving PROTON with a retained share of 40 percent.

This partnership reflects a significant investment-driven effort aimed at increasing production capacity and enhancing product quality. AAPICO will make an initial investment of RM40 million into AVEE Global’s extensive 20-acre manufacturing facility, with plans for an additional RM100 million in 2024 to extend plant operations and procure new manufacturing equipment.

Industry Overview in Malaysia

Malaysia's automotive industry is experiencing a revival, driven by robust local demand for vehicles and favorable economic conditions. The government’s commitment to growing the manufacturing sector, alongside investments in infrastructure, provides a conducive environment for automotive manufacturers. There is a rising uptake of electric vehicles and advanced manufacturing techniques, highlighting the industry’s adaptation to global trends.

As a key player in the ASEAN automotive market, PROTON is positioned to leverage its brand strength and local manufacturing capabilities. The automotive sector is vital for Malaysia’s economy, contributing significantly to GDP and employment. Various initiatives by the government are aimed at boosting local production and innovation, ensuring a competitive edge in the regional market.

The growing interest from foreign investors, coupled with a domestic push towards modernization, underscores the potential for further growth within the automotive sector. Investments in local partnerships, such as that between PROTON and AAPICO Hitech, align with broader industry efforts to enhance technological capabilities and production efficiency.

Additionally, the focus on human capital development through job creation reflects the sector's commitment to nurturing a skilled workforce, which is essential for sustaining growth and innovation in the industry.

The Rationale Behind the Deal

The collaboration between PROTON and AAPICO is designed to capitalize on the potential growth in Malaysia's automotive market, particularly driven by increasing demand for PROTON vehicles. By joining forces with AAPICO, which holds expertise and existing market experience, PROTON aims to enhance its manufacturing efficiency and broaden its product offerings.

The deal is strategically timed to support PROTON’s ambitions of scaling up operations, facilitating technological advancements, and improving cost efficiencies, ultimately propelling PROTON further into the competitive landscape of the automotive sector.

Information About the Investor

AAPICO Hitech Public Company Limited is a prominent player in Thailand's automotive parts manufacturing sector. With a portfolio that includes partnerships with leading automotive brands and a commitment to innovation, AAPICO is well-equipped to contribute to the operational management of Aapico Avee Sdn. Bhd. Their expertise promises to introduce advanced manufacturing technologies to the Malaysian market.

Additionally, AAPICO's previous ventures in Malaysia showcase its investment strategy focused on establishing lasting partnerships that bolster local manufacturing efforts. This joint venture with PROTON represents a dedication to not only expand AAPICO's market presence but also to support Malaysia’s automotive ecosystem development.

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This partnership between PROTON and AAPICO has the potential to be a highly beneficial investment for both parties. The infusion of RM40 million will significantly aid in enhancing manufacturing capabilities, Indicating a strong commitment to local production growth. Furthermore, the anticipated future investments signify confidence in the long-term viability of the partnership.

AAPICO's track record in the automotive sector aligns with PROTON's goal of becoming a significant player in the ASEAN automotive market. Leveraging AAPICO's technological expertise will likely elevate PROTON's offerings, thus attracting more consumers and boosting market share.

Additionally, the collaboration is poised to create new job opportunities and refine the skills of the local workforce, contributing positively to the economy and enhancing the overall automotive supply chain in Malaysia. If executed effectively, this partnership could serve not only as a landmark achievement for both companies but also as a model for future industry collaborations in the region.

In summary, given the strategic alignment and investment commitment, this joint venture appears to be a promising investment that could yield significant returns and catalyze growth for PROTON within a flourishing automotive market.

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