Tan Chong Motor posts 3rd straight profitable quarter as tax holiday boosted sales

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KUALA LUMPUR (Nov 27): Tan Chong Motor Holdings Bhd, which suffered losses in the past two financial years, announced its third consecutive quarter in the black today, thanks to the three-month tax holiday following the zero-rating of the goods and services tax that boosted sales, and the launch of its Nissan Serena.

The group recorded a net profit of RM32.86 million or 5.04 sen per share for the third quarter ended Sept 30, 2018 (3QFY18), versus a net loss of RM23.09 million or 3.54 sen per share in the year-ago quarter, its Bursa Malaysia filing today showed.

Tan Chong said its revenue for 3QFY18 grew 46% year-on-year to RM1.57 billion from RM1.07 billion.

Cumulatively, the group's nine-month period (9MFY18) net profit came in at RM49.48 million, versus a net loss of RM81.41 million in the same period last year, while revenue grew 13% to RM3.69 billion from RM3.27 billion.

Moving forward, Tan Chong said while sales of new vehicles increased during the tax holiday period before the re-introduction of sales and service tax (SST) which came into effect on Sept 1, the market is expected to remain challenging.

"Demand for new vehicles is expected to be dampened in the post-tax holiday period following the implementation of the new SST in a competitive business environment with strict lending guidelines. On the global front, the intensifying trade tensions between two of the world's largest economies could continue to impact global trade and heighten market volatility.

"These external uncertainties may affect the direction of the ringgit. Although the business environment is anticipated to remain challenging, the group expects to perform satisfactorily this year," it said.

Tan Chong Motor's share price gained six sen or 4.17% to close at RM1.50 today, giving it a market capitalisation of RM978.99 million.