KUALA LUMPUR (Nov 29): CIMB IB Research has maintained its “Reduce” rating on Tan Chong Motor Holdings Bhd (TCM) at RM1.51 with a lower target price of RM1.49 (from RM1.55) and said TCM posted a wider core net loss in 9M17 due to weaker sales performance and higher operating costs.
In a note Nov 28, the research house said the results fell short of both house and consensus’ expectations.
CIMB Research said Nissan’s sales volume fell by 32% year-on-year in 9M17 due to intense competition in the market and the absence of new model launches.
“We cut our FY17-19F EPS forecasts by 9-72% to account for lower sales volume and lower operating margins due to higher import costs.
“Maintain Reduce with a lower RM1.49 TP as we roll over our valuation to end-2018. Lack of new model launches and widening losses are de-rating catalysts for the stock.
“For exposure to the Malaysia auto sector, we prefer Bermaz Auto Bhd due to its stronger earnings delivery and higher dividend yield,” it said.