Tan Chong reported another disappointing quarter, with deeper than expected losses in FY23 says MIDF in its analysis report. The group reported a net loss of – RM55m for its 4QFY23, which brought FY23 net loss to -RM129m, which made up 130%/210% of consensus projected FY23 net loss. The shortfall against the broking house’s forecast was due to weaker than expected Nissan TIV and margins.
Group 4QFY24 revenue was down -13%yoy to RM644m due to weaker contribution from the auto division (-19%yoy to RM579m). This was due to supply chain constraints, lack of timely refreshed product line-up and stiffer competition in the local and overseas markets. Furthermore, margins were negatively impacted by the weaker Ringgit, which resulted in the automotive division registering an LBITDA of – RM6.4m. The financial services division saw better revenue (+2%yoy) but EBITDA contracted to RM1.5m given higher impairment losses on hire purchase receivables. Meanwhile LBITDA for other operations narrowed to -RM8m due to lower net forex losses from outstanding balances denominated in foreign currencies.
In the 4QFY23, both the Malaysian and Vietnam operations fell into the red dragged mainly by weaker auto division performance. Positively, the Vietnam unit registered narrower LBITDA (-58%qoq), which MIDF says it reckons was supported by launch of a rebadged version of SGMW’s N300P light truck for the Vietnam market in November 2023. Other Indochina markets returned marginally to the black given improved revenue.
TCM was appointed as distributor for GAC Motor International (GAC) for the Vietnam market recently, which could support
further recovery of its Vietnam unit going forward, though details of its plans here are still sketchy. Despite the result underperformance, the house is keeping its FY24F largely unchanged as it factors in narrowing losses for TCM’s Vietnam unit and introduce FY25F at a narrower net loss of -RM34m.
