KUALA LUMPUR (March 1): CIMB IB Research has maintained its “Reduce” rating on Tan Chong Motor Holdings Bhd at RM1.66 with a lower target price of RM1.56 (from RM1.61) and said Tan Chong’s FY16 results were above expectations as core net loss was 15% and 14% lower than house estimate and consensus, respectively, due to narrowing losses in 4Q16.

In a note today, the research house said Tan Chong slipped into core net loss of RM51.1 million in FY16 from core net profit of RM55.4 million in FY15 due to poor sales volume on the back of weak consumer sentiment.

It said the company proposed a final dividend of 1 sen for FY16, below house expectation.

“We cut FY17-18F EPS by 42-73% to account for lower sales volume assumptions in view of weak consumer sentiment and lack of new model launches.

“Switch to Bermaz Auto Bhd for better exposure to auto sector,” it said.