Proton: Is Syed Mokhtar for the land or for the business?

Syed Mokhtar is a very shrewd businessman. Proton is a business which needs rescuing - by a foreign party however - as for 25 years not any local businessman here have proven the ability to make the business of automotive production successful. Moving forward, the business of producing cars will get even more competitive as there are companies such as Volkswagen, Toyota, Honda, GM, Ford, Hyundai and several other smaller brands fighting it out in a very competitive environment. Those who are successful however will benefit as it is a very lucrative business.

This type of competition however is not for Syed Mokhtar. He is already having his hands full with other businesses. Today, the news appeared that Syed Mokhtar is pulling Proton private. Why? Just look at its land...

Major portion of land held Proton - does not include others in UK, US and other states in Malaysia

A quick calculation - 7,142,890 sq ft in Petaling and Glenmarie alone. How much does freehold land in Glenmarie fetch? RM200 per sq ft easily. It will be worth more if the single piece is very large - err say 163 acres where you can use for multi development? What do you think it is worth then? RM1.4 to RM1.6 billion.

What about the 55 million sq ft land in Tanjung Malim? RM10 per sq ft for a industrial freehold land is reasonable for that place. That would come to RM550 million.

Hence, we now know that the total value for Proton's land in Selangor and Tanjung Malim alone could be worth up to RM2 billion. This does not include the others in other states in Malaysia (for Sales and Service), UK (Norwich, Bristol) and US.

What is the value of land in the books? RM215 million - just. Hence it is way under-declared.

Shows land value in the books at RM215 million

By going private, Syed Mokhtar is putting up RM3 billion to buy back all the shares at RM5.50 per piece. The total net asset value in the books alone is RM5.4 billion and we know that the asset especially land is underdeclared.

So what do you think? Syed Mokhtar is for the land or business? - or both? As he probably has more things up his sleeves. What about his relationship with Volkswagen via DRB-Hicom and we know that VW was interested in Proton's manufacturing plant before.

Note: In most cases, where there is an acquisition exercise, usually fixed assets will be revalued so that shareholders can have a view of what they are holding - in this case, those are bypassed.