Tan Chong Motor Holdings Berhad (TCM) is gearing up to launch an all-new e-POWER model in the fourth quarter of 2024.
This model, expected to enter the B-segment SUV category as a completely built unit (CBU), is anticipated to be competitively priced, with hopes of driving significant sales growth.
Additionally, Warisan Tan Chong Automotif (WTCA), a subsidiary of TCM, has commenced local production (CKD) of the GAC GS3 Emzoom at its Segambut plant.
According to MIDF Research (MIDF) in a note today (Sept 4), although TCM is not the distributor of this model, the production is expected to increase plant utilisation from below 30% to over 50%, solely due to this single model.
While in Vietnam, TCM recently introduced the GAC GS8 (E-segment SUV) and M8 (MPV) in August 2024, generating over USD 1.0 million in bookings from a single-day event, although this translates to fewer than 15 units.
The Group is also planning to launch a new C-segment MPV in October 2024, which is expected to be a significant volume driver in the market. TCM aims to convert this model to local production (CKD) by the fourth quarter of FY2025, which could serve as a catalyst for a turnaround in the Vietnamese market.
MIDF also noted that while sales of TQ Wuling N300P light trucks and Euro 5 King Long buses have been slower than expected, they are gradually picking up, improving plant utilisation.
TCM's operations in Myanmar have been limited by inventory constraints and import restrictions since October 2021. Despite these challenges, the company reported a small profit in July 2024, driven by improved sales and production.
In other markets, stock supply issues have persisted, with the Nissan Navara only recently becoming available in Cambodia. However, the Nissan X-Trail has gained traction in Laos due to its competitive pricing, contributing to better performance in the third quarter of FY2024.
Despite these developments, MIDF said they opted to maintain a 'Neutral' rating on TCM's stock, with no changes to its earnings estimates or target price, which remains at RM0.77, based on a forecasted price-to-book value (P/BV) of 0.20x for FY2025.
While the recent appreciation of the US dollar against the Malaysian ringgit (USDMYR) may provide some support, TCM expects the Malaysian market to remain challenging due to intense competition.
