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Business Times
27-05-2025
- Automotive
- Business Times
Maybank downgrades Malaysia's Tan Chong Motor to ‘sell' amid widening losses, competition
[SINGAPORE] Maybank Investment Bank has downgraded Malaysia's Tan Chong Motor (TCM) to 'sell', from 'hold' previously, amid widening losses, weak product appeal and intensifying competition. Despite the downgrade, Maybank maintained its target price for the Bursa-listed company at RM0.38, based on an unchanged 0.1 times its forecast book value for FY2025. TCM is the franchise holder for Nissan in Malaysia and Indo-China, as well as Renault in Malaysia and MG in Vietnam. In a report on Monday (May 26), Maybank analyst Loh Yan Jin cited increased downside risks following a recent rally in TCM's share price as the reasons for downgrading its call on the automotive company. The stock has climbed nearly 60 per cent from its 52-week low of RM0.29 to RM0.46 in recent months. 'We believe downside risks have increased following the recent rally in share price,' Loh said. TCM reported a core net loss of RM44.5 million (S$13.5 million) for the first quarter of 2025, more than double the RM18.3 million loss recorded in the same period a year earlier. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Commenting on TCM's widening year-on-year losses, Loh said the latest results were in line with Maybank's full-year forecast of a RM147.3 million loss, but came in below the consensus estimate of a RM129.4 million loss. Revenue for Q1 2025 slipped 2 per cent to RM553 million, weighed down by continued weakness in Nissan sales, which plunged 21 per cent year on year to 1,811 units. However, Loh said the weakness in Malaysia was partially offset by growth in TCM's overseas operations, including Vietnam, Cambodia, Laos and Myanmar. On a quarter-on-quarter basis, TCM's Q1 2025 revenue rose 8.2 per cent from RM511.2 million in Q4 2024, supported by a 22 per cent increase in Nissan sales in Malaysia and higher vehicle assembly and manufacturing activity. Loh attributed this to a rebound from 'seasonally softer' year-end sales, which had been affected by intense promotions and competing model launches. As a result, core net loss for Q1 2025 narrowed by 29 per cent to RM44.5 million from RM62.9 million in Q4 2024. 'Looking ahead, we expect challenges in TCM's automotive segment to persist, underpinned by weak product appeal and intensifying market competition,' Loh said. 'Soft consumer sentiment and unattractive model launches will further weigh down its earnings.' A key re-rating catalyst, she added, would be stronger sales from new product launches or contract assembly deals, but 'visibility remains limited for now'. 'Improved operational efficiencies and better inventory management could also help enhance margins and profitability,' she said. As at 4 pm on Tuesday, shares of TCM are trading RM0.455.
The Sun
22-05-2025
- Business
- The Sun
Sorento Capital delivers strong Q3 FY25 performance with RM8.1m PBT
KUALA LUMPUR: Bathroom and kitchen sanitary ware solution provider Sorento Capital Bhd posted a revenue of RM41.1 million for the third quarter (Q3) ended March 31, 2025 (FY25) with a profit before tax (PBT) of RM8.1 million and a net profit of RM6.3 million. This translates to a PBT margin of 19.7% and a net profit margin of 15.3%. There are no figures to compare with the same quarter last year because this is only the third interim financial report prepared to meet Bursa Malaysia's ACE Market listing requirements. For 9M FY25, the company reported a PBT of RM25.2 million and net profit of RM18.3 million, against revenue of RM135.9 million. On an adjusted basis, after excluding one-off IPO listing expenses of RM3.1 million incurred during the nine-month period, Sorento Capital's adjusted PBT and net profit would have been RM28.3 million and RM21.5 million respectively. This represents a PBT margin of 20.8% and a net profit margin of 15.7%. Managing director Loo Chai Lai said the company's growth strategy remains centred on expanding its dealer network. 'We plan to recruit approximately 200 new dealers over the next three years, building on our existing base of 664 dealers in FY24. 'As of the first nine months of FY25, we have already added 96 new dealers. This expansion will further enhance our market reach and ensure nationwide accessibility to our products,' he added. Industry prospects remain positive, supported by rising disposable incomes and growing lifestyle expectations, which are expected to drive increased bathroom and kitchen renovation spending. The rise in residential and commercial construction activities further supports the positive industry outlook. Government-led infrastructure initiatives, covering tourism infrastructure and public housing, are expected to drive demand for bathroom and kitchen sanitary ware solutions. In line with this trend, Sorento Capital is expanding its footprint across key building segments, including residential projects, hotels, office buildings, and both new build and renovation developments. By actively participating in a broader range of project types, the company aims to diversify its revenue base and tap into emerging market opportunities. Sorento Capital maintained a healthy net cash position, with cash and cash equivalents of RM56.7 million as at March 31, 2025, exceeding total loans and borrowings of RM4.1 million. This was further supported by a robust net operating cash inflow of RM16.8 million for 9MFY25. With a minimal debt profile, Sorento Capital can capitalise on future growth opportunities while delivering consistent value to its shareholders. To recap, Sorento Capital was listed on the ACE Market of Bursa Malaysia on October 28, 2024, and successfully raised RM57.4 million. Sorento Capital is expanding its footprint across key building segments, including residential projects, hotels, office buildings, and both new build and renovation developments.
