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CIMB Research maintains Outperform on Tan Chong

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CIMB Research maintains Outperform on Tan Chong  Empty CIMB Research maintains Outperform on Tan Chong

Post by hlk Mon 22 Aug 2011, 09:29

KUALA LUMPUR: CIMB Equities Research is maintaining its Outperform call on TAN CHONG MOTOR HOLDINGS BHD [], earnings forecast and sum-of-parts based RM6.10 target price.

It said on Monday, Aug 22, Tan Chong has decided to defer its property development plan in Segambut to meet the rising volumes from its sister companies as well as its own expansion plans.

CIMB Equities Research said Tan Chong is gunning for a doubling of its market share in Malaysia to 10.0% through aggressive model launches that piggyback on Nissan Japan’s new strategy.

“We are neutral on the news of deferment of the property venture, having always viewed it as a long-term proposition and not factoring in any earnings contribution from it. In fact, this news reaffirms the priority that Tan Chong puts on the auto business and suggests rising production volumes.

“We maintain our earnings forecasts, SOP-based RM6.10 target price and OUTPERFORM recommendation. Potential re-rating catalysts include 1) a 2H earnings recovery, 2) strategic expansion of its model mix, and 3) regional ambitions,” it said.
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