RHB Research upbeat on Tan Chong Motor

RHB Research is optimistic about Tan Chong Motor Holdings Bhd’s prospects on back of the improvement in its Indochina operations and with the introduction of several new models in the domestic market.

It said Tan Chong’s Indochina operations continued to show good progress with increasing sales volume while it mulled introducing new models.

“The Indochina operations have started to show tangible improvement. Further traction would help Tan Chong diversify its earnings away from the competitive and saturated domestic market. Potential new model launches are another earnings driver,” it said in a report recently.

RHB Research said the Indochina business registered a higher sales volume year-onyear, with Vietnam sales growing 1.0 per cent, thanks to consistent sales of its Nissan Sunny model.

Laos and Cambodia sales volumes grew 56 and 64 per cent to 218 and 176 units, respectively, after the introduction of the Nissan Terra and Navara Premium Plus at the end of last year while Myanmar sold 432 units in the first quarter of this year.

RHB Research said Tan Chong’s new assembly contract at its Vietnam plant in Danang would support future growth.

“Tan Chong is in the midst of increasing capacity in Myanmar as production there is operating at a full run-rate of 1,300-1,400 units a year.

“The first phase of expansion to increase capacity to 5,000 units a year should be completed in second half of 2019.”

It said Tan Chong was studying the viability of bringing Nissan Almera, Kicks and Sylphy into the Malaysian market.