PETALING JAYA: Tan Chong Motor Holdings Bhd
(TCM) is expected to see an improvement in group sales volume from 2025 onwards, backed by the launch of e-Power Nissan Kicks in 4Q24, as well as new GAC models in Vietnam.
According to Hong Leong Investment Bank (HLIB) Research, the group is also expected to benefit from the recent appreciation of the ringgit against the US$.
To recap, TCM had recorded a higher net loss of RM55.83mil despite posting a revenue of RM1.12bil in 1H24 ended June 30, 2024, on the back of weak group sales volumes and margins.
On the local market, HLIB said sales had dropped by 9.5% to 4,811 units in 1HFY24 due stiff market competition and lack of Nissan new model launches.
Operating profits dipped 27.3%, attributed to lower sales volume and depreciation of the ringgit.
However, HLIB said the Malaysian market will remain competitive due to attractive new launches by various competing original equipment manufacturers (OEMs).
TCM also guided that it has planned a “good” combination of new e-Power and internal combustion engines (ICE) models within the next two years to drive volume growth.
As for operations in Vietnam, HLIB Research noted that sales volume has deteriorated 89.8% to only 145 units in 1H24.
This was due to cessation of MG distributorship effective mid-2024.
“The group continues to leverage onto its TQ pickup truck and Kinglong bus in the meantime to sustain operations, as well as the new GAC distributorship which had recently launched the GS8 and M8 models.
"The expected launch of the new e-Power and new GAC models in Vietnam are expected to improve the group’s sales volume from 2025 onwards,” HLIB added.
Meanwhile, HLIB noted a mixed performance in the group's overseas markets. Myanmar’s market environment has seen an improvement with small profits while Laos and Cambodia remain weak due to deteriorated consumer sentiments.
“The recent launch of e-POWER Nissan X-trail model in Laos and the inventory replenishment of Nissan Navara model in Cambodia are expected to offer some reprieve,” it added.
HLIB maintained its earnings forecast and “sell” call on TCM with an unchanged target price of 65 sen.
