KUALA LUMPUR (Jan 10): Tan Chong Motor Holdings Bhd has secured the rights to be the exclusive distributor, assembler and after-sales service provider of King Long products in Vietnam.
Its wholly-owned subsidiary TC Motor Vietnam Co Ltd (TCMV) entered into the exclusive distributorship agreement with Xiamen King Long United Automotive Industry Co Ltd today, the group said in a filing with Bursa Malaysia.
The partnership with the Chinese company which specialises in the design, production and sale of various buses and coaches, will help facilitate Tan Chong’s penetration into the different bus and coach segments, Tan Chong said.
“The securing of the King Long franchise will enable TCMV to complete its application for a manufacturing licence from the Vietnamese authorities,” the group said.
In addition, King Long has offered to collaborate with the parent group in Malaysia.
TCMV’s new business will require US$9 million (RM36 million) in working capital, which will be contributed by Tan Chong from its internal sources.
This will provide for the construction of a plant which is expected to begin operations in the fourth quarter of 2018, and the purchase of equipment, the filing added.
“The new King Long business will not contribute significantly to our revenue and profit for the financial year ending Dec 31, 2018, but is expected to contribute positively to earnings in the long term,” the group added.
Shares of Tan Chong rose 5 sen or 2.86% to a six-month high of RM1.80 today, giving the group a market capitalisation of RM1.21 billion.