KUALA LUMPUR: Tan Chong Motor Holdings Bhd's losses of RM30.9 million in the first quarter ended March 31, 2024, came in below Hong Leong Investment Bank's (HLIB Research) and consensus' expectations by 59.4 per cent and 43.7 per cent respectively.
The firm said in a note that it remained cautious about the group's domestic market outlook due to the ongoing stiff competition for the various segments in the market as peer original equipment manufacturers (OEMs) introduce new attractive models with discounting promotional activities.
"The emergence of Chinese OEMs in the domestic market has also contributed to the stiffening of market competition.
"Nevertheless, the indicative new launch of the e-power Nissan Kicks (B-segment SUV) in the second half of 2024 is expected to improve Nissan sales volume. The appreciated dollar, higher logistic costs, and material costs will also continue to affect Tand Chong Motor's margins in the coming quarters," it said.
It added that Vietnam remains slow with the discontinuation of the company's completely-built-up (CBU) MG brand vehicles' distributorship since mid-2023.
In the meantime, TCM will continue to focus on TQ light trucks and King Long buses.
Other markets, namely Laos, Cambodia, and Myanmar, remain weak due to deteriorated consumer sentiment and political uncertainty.
The firm revised its earnings forecast for financial year 2024 (FY24) to a loss of RM98.4 million from RM51.9 million previously and an earning of RM35.5 million for FY25.
It maintained a "sell" call on the stock with an unchanged target price of 65 sen.