Tan Chong Motor to continue doing well on strong Nissan sales
KUALA LUMPUR: Tan Chong Motor Holdings Bhd (Tan Chong Motor) has been projected by analysts to continue doing well moving forward, on the back of strong Nissan sales.
Aside from strong Nissan sales, AmInvestment Bank Bhd (AmInvestment Bank) also believed that Tan Chong Motor will continue to do well going forward based on prospects of new models to further fortify the group’s margins and the rebuilding of the Nissan brand.
“Risk factors include a continuing spike in inventory levels, a severe weakening of the ringgit and a worsening of its IndoChina operations,” the research firm said, following a meeting with Tan Chong Motor’s management on Wednesday.
However, AmInvestment Bank has trimmed Tan Chong Motor’s financial year 2019 and 2020 (FY19FY20) core net profit by 12.4 per cent and 11.4 per cent, respectively, to account for the softer ringgit.
The research firm’s core net profit estimates for FY19F and FY20F thus amounted to RM102.9 million and RM118.8 million, respectively.
“Our FY19-20F US dollar-ringgit assumption has been revised from RM4.12 to RM4.16, which is one to two per cent lower than our base case of RM4.08 to RM4.10.
“This is to reflect the recent weakness of the ringgit which is expected to impact the group’s earnings in the coming quarters.”
That said, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) projected forex loss to be cushioned by highmargin models.
“We believe forex loss (largely from unsold inventory) will be cushioned by the higher volume sales growth of its popular, high margin models of face-lifted Nissan X-Trail’s maiden contribution, continued delivery of all-new Nissan Serena and supported by the recovery in Indochina sales, especially the Vietnam region, post-major Chinese New Year (CNY) celebration,” Kenanga Research explained.