by M JAY SHEILA

AUTOMOTIVE assembler and distributor Tan Chong Motor Holdings Bhd has retained ‘Sell’ call at Hong Leong Investment Bank Bhd Research (HLIB Research) with a lower target price (TP) of 72 sen.

In a report today, HLIB Research said Tan Chong’s performance remained weak in FY23, given the ending of the Sales and Service Tax (SST) exemption advantage and ongoing stiff market competition in Malaysia.

However, HLIB Research expects sales to improve in the fourth quarter of 2022 (4Q22).

“Management is committed to avoid direct pricing competitions with other original equipment manufacturers and remains dependent on its core models: Almera, Serena Hybrid and Navara.

“Within Indochina market, we expect sales improvement (especially Vietnam) in tandem with the anticipated recovery of economic activities and recovery of the supply chain,” the research report added.

HLIB Research said the company remains affected by the appreciated US dollar, high logistics and material costs that may continue to affect margins in coming quarters.

Four other local research houses have also updated their calls on Tan Chong today. CGS-CIMB Securities Sdn Bhd reiterated its ‘Reduce’ call with a lower TP of 97 sen, Kenanga Investment Bank Bhd maintained its ‘Underperform’ (85 sen), Maybank Investment Bank Bhd maintained ‘Buy’ (RM1.35) and RHB Investment Bank Bhd maintained ‘Neutral’ (RM1.10).

In a Bursa Malaysia filing yesterday, Tan Chong posted a net profit of RM6.88 million in 3Q22 compared to a net loss of RM44.2 million a year ago.

Its shares last traded at RM1.12 per share on Nov 21, giving it a market capitalisation of RM730.4 million.