KUALA LUMPUR (May 8): Tan Chong Motor Holdings Bhd's planned automotive and commercial vehicle hub in Bagan Datuk, Perak received mixed views from analysts. Hong Leong Investment Bank said it is negative on the news as Hong Leong believes Tan Chong's priority should be improving its Nissan vehicle sales in Malaysia.

Meanwhile, JF Apex Securities Bhd said it believes Tan Chong's automotive and commercial vehicle hub in Bagan Datuk will further strengthen its automotive business by helping the company expand into the commercial vehicle segment.

Hong Leong analyst Daniel Wong wrote in a note today: "We are negative on the announcement as the group's priority is to recover local Nissan sales and to improve its utilisation rate of their Segambut plant. Nissan domestic sales fell from the peak of 42.2k units in 2015 to 27.2k units in 2017. YTD, its market share has slipped further to 3.9% from 4.7% in 2017. Nissan sales was at 5.3k units in YTD 2018 and 2.0k units in March 2018. Tan Chong currently sees total utilisation stood below 50% of its Segambut plant."

JF Apex analyst Nursuhaiza Hashim wrote in a note today that Tan Chong's Nissan passenger car sales performance seems unfavourable in the last few years due to a lack of new models as well as stiff competition among its peers.

"Overall, we are still cautious on the group's future outlook amid the current headwinds in relation to fluctuation of forex (foreign exchange), stringent hire purchase approval and tepid consumer sentiment towards the big-ticket items." Nursuhaiza said.