Tan Chong Motor share price lowest since 2004 after RM61.7 million loss in 1H2024; Nissan e-Power expected in Q4
The outlook for Tan Chong Motor Holdings is not looking good. The group, which owns the Nissan, Renault and GAC brands in Malaysia, saw its share price fall to just 70.5 sen yesterday – its lowest since April 2004 – after posting a bigger-than-expected quarterly loss, according to Edge. Although the company has a market capitalization of RM474 million.
On the same day, Hong Leong Investment Bank (HLIB) Research issued a note maintaining a “sell” rating on the stock, raising concerns about the group’s continued weak sales volumes amid deteriorating market conditions. Nissan in particular has had a tough time – the company was once the fifth-best-selling carmaker in Malaysia, but last year dropped to ninth with only 10,000 cars sold in all of 2023.
The gloomy business situation continued this year when the group recorded only 4,811 vehicles sold in the first half of the year, down 9.5% compared to the same period in 2023. Operating profit also decreased by 27.3% compared to the same period last year.
Unsurprisingly, this had a negative impact on the company’s net profit. Tan Chong Motor recorded a core loss after tax and minority interest of RM30.8 million in the second quarter of the year, extending its first-half loss to RM61.7 million, compared to RM55.9 million in the same period in 2023. The research firm maintains its target price of 65 sen, based on a 12 times constant price/earnings multiple labeled as FY25E earnings, so the stock still has plenty of room to fall.
The company added that it remains cautious on its domestic market outlook due to stiff competition, as both domestic and foreign rivals launch “attractive” new models. Elsewhere, HLIB Research expects sales in Laos, Cambodia and Myanmar to remain weak due to deteriorating consumer sentiment and political instability.
However, there are still bright spots such as in Vietnam with the start of GAC car distribution, offsetting the end of MG car distribution (leading to an 89.9% decrease in sales compared to the same period last year to 145 cars) here.
In Malaysia, HLB Research expects sales to recover thanks to the revival of Nissan’s aging product line-up with new models starting in the fourth quarter, including those using the company’s e-Power hybrid powertrain. Edge The report listed the Kicks, but that’s probably just a misnomer based on the car. appeared at the Malaysia Motor Show in May; the widely anticipated actual car is the latest C28 Serena.
Looking to sell your car? Sell it with Car.
