It’s not looking great for Tan Chong Motor Holdings at the moment. The group, which holds the franchises for Nissan, Renault and GAC in Malaysia, saw its share price slide to just 70.5 sen yesterday – the lowest since April 2004 – after recording larger-than-expected quarterly losses, according to The Edge. This is despite the company having a market capitalisation of RM474 million.
The same day, Hong Leong Investment Bank (HLIB) Research released a note maintaining a “sell” card on the stock, raising concerns over the group’s continued weak sales volume amid deteriorating market conditions. Nissan in particular has had a torrid time – the firm was once the perennial fifth best-selling car company in Malaysia, yet last year it fell to ninth with just 10,000 vehicles sold in all of 2023.
The dismal performance continued this year, with the group registering just 4,811 units of sales in the first half of the year, a 9.5% decrease over the same period in 2023. Operating profits also fell 27.3% year-on-year.
Unsurprisingly, this had a detrimental effect on the company’s bottom line. Tan Chong Motor recorded a core loss after taxes and minority interests of RM30.8 million in the second quarter of the year, dragging losses in the first half to RM61.7 million, compared to RM55.9 million in the same period in 2023. The research house maintains a target price of 65 sen, based on 12 times of unchanged price/earnings ratios tagged to expected 2025 earnings, so the share price has quite a bit to fall yet.
It added it remained cautious of the company’s domestic market outlook due to stiff competition, as both national and non-national rivals have launched “attractive” new models. Elsewhere, HLIB Research expects sales in Laos, Cambodia and Myanmar to remain weak as a result of deteriorating consumer sentiment and political uncertainty.
There are bright spots, however, such as in Vietnam with the commencement of the distribution of GAC vehicles, making up for the ending of MG distributorship (which led to an 89.9% year-on-year sales drop to 145 units) there.
In Malaysia, HLB Research expects sales to rebound with a revitalisation of Nissan’s badly aging lineup with new models starting in the fourth quarter, including those powered by the company’s e-Power hybrid powertrains. The Edge report listed the Kicks, but that’s likely a red herring based on the car appearing at the Malaysia Autoshow in May; the actual car is widely anticipated to be the latest C28 Serena.
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