RAM Ratings has assigned the respective AA3(s)/Stable and P1(s) ratings to Perusahaan Otomobil Nasional Sdn Bhd's (PROTON or the Company) proposed RM4.0 bil Islamic Medium Term Notes Programme (2021/2051) and RM1.0 bil Islamic Commercial Papers Programme (2021/2028), with a combined limit of RM4.0 bil (the programmes). The enhanced ratings assigned to the proposed programmes issued by PONSB Capital Berhad reflect the credit strength of PROTON as the purchase undertaking obligor to the programmes. 

PROTON's credit profile underscores its position as Malaysia's second largest automaker and the continuous support from its shareholders, particularly its access to products and management expertise from China-based Zhejiang Geely Holding Group Company Ltd (ZGH). While improvements to its financial metrics were temporarily weighed down by the pandemic, these should soon reach levels that commensurate with its ratings. This is despite the expectations of high capex requirements for plant expansions and product development, in the near term. These rating positives are however, moderated by continuous investment requirements to remain competitive in an already saturated market. Inherent vulnerability to economic cycles, rapidly evolving automotive landscape and technological advancements in the race for greener vehicles add to these challenges. 

The ratings also consider Proton Holdings Berhad's (Proton Holdings or the Group) close relationship with ZGH. PROTON is wholly-owned by Proton Holdings and is the principal operating subsidiary of the Group. In our rating assessment, we have equated the credit profile of PROTON and Proton Holdings due to their highly interconnected operations and financials. 

Despite the marginally higher ownership interest of DRB-HICOM (50.1%) in Proton Holdings, we view ZGH (49.9%) to exert greater influence over the Group. This is reflected in PROTON's board composition which has a greater number of directors, as well as top management af