Recently, Tan Chong Motor Holdings Berhad (TCMH) announced its 3QFY2024 results. The group recorded a Loss Before Tax (LBT) of RM103.8 million, with revenue declining by 28.8% to RM462.7 million compared to RM649.8 million in 3QFY2023. This drop was mainly due to weaker consumer sentiment and intense competition in automotive landscape, particularly from Chinese brands that are expanding their presence in Malaysia. Additionally, foreign exchange losses increased significantly to RM53.2 million, compared to RM6.2 million in the same period last year. This also marks its 8th consecutive quarter in the red since 4QFY2022.
On a YTD basis, the group reported a higher LBT of RM162 million, driven by a 16.8% decline in revenue to RM1.6 billion (9MFY2023: RM1.9 billion) and higher foreign exchange losses of RM48 million compared to foreign exchange gain of RM32.2 million recorded in the same period preceding year.
Our view:
1) TCMH’s outlook looks gloomy considering weak consumer sentiment and also lack of competitiveness within the automotive industry.
2) Investors who are holding on to the 2025 sukuk can continue holding and can opt to pare down their holdings of Tan Chong’s 2026 and 2027 sukuk as we opine that the consistent losses will lead to lower cash holdings and liquidity issues in the future.
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