Tan Chong wider losses pull share price to 8-year low

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KUALA LUMPUR (Nov 29): Tan Chong Motor Holdings Bhd invited analysts' downgrades after the Nissan car distributor in Malaysia reported a wider RM23.09 million net loss in the third quarter ended Sept 30, 2017 (3QFY17), from a net loss of RM4.5 million a year earlier. 

Nine-month (9MFY17) net loss stood at RM81.41 million, from a net loss of RM56.3 million a year earlier, Tan Chong said yesterday. 

Today, CIMB Investment Bank Bhd lowered its Tan Chong share target price (TP) to RM1.49, from RM1.55, but maintained its “Reduce” rating on the stock. 

“We cut our FY17-19F EPS forecasts by 9-72% to account for lower sales volume assumptions, in view of the weak demand and lack of new model launches,” CIMB wrote in a note today.

At 12:30pm today, Tan Chong shares settled at RM1.52, with 94,900 shares traded. During yesterday's intraday trades, the stock was transacted at RM1.49, the lowest in about eight years since Sept 1, 2009, Bloomberg data show. 

Today, Kenanga Investment Bank Bhd said it lowered its TP for Tan Chong shares to RM1.40, from RM1.45, but retained its “Underperform” rating on the stock.

“Given Tan Chong’s weak earnings visibility, as well as loss-making quarterly results, which remain our prime concern, and as such the stock could trade at a steeper discount to its book value.

“We foresee that the recent strengthening in ringgit against US dollar and Japanese yen is still insufficient to negate the adverse effects on Tan Chong’s business model,” Kenanga wrote in a note today.