KUALA LUMPUR (May 14): BIMB Securities Research has maintained its “Hold” rating on Tan Chong Motor Holdings Bhd (TCM) at RM3.05 with a revised target price of RM2.81 and said TCM’s 1QFY15 net earnings of RM26.3 million were below house and consensus expectations, making up only 16.1% of house estimate.
In a note today, the research house said despite year-to-date revenue increase of 24.5%, net earnings fell by 36.5%.
“The lower earning is due to the higher CKD kits cost arising from unfavourable foreign exchange rate.
“In view of the uncertainties in global and local economic environment as well as the impact from GST on consumer spending behaviour, we have revised our FY15 and FY16 net earnings lower to RM118.2 million (-27%) and RM166.8 million(-27%).
“As such, we are maintaining our Hold call on the stock with the lower target price of RM2.81 based on PER of 16x premised on our FY15 EPS,” it said.