Stock Name: TCHONG
Company Name: TAN CHONG MOTOR HOLDINGS BHD
Tan Chong Motor Assemblies (TCMA) Sdn Bhd's contract to assemble passenger vehicles for TC Subaru Sdn Bhd will raise the capacity utilisation of its Segambut plant by 15 per cent, said OSK Research.
Tan Chong Assemblies is a 70 per cent subsidiary of Tan Chong Motor Holdings Bhd (TCM) while TC Subaru is a subsidiary of Tan Chong International.
The plant is currently under-utilised since most of TCM's vehicles are now produced at the Serendah plant, OSK said.
"Hence, there could be further cost savings on unit fixed costs," it said in a research note today.
The contract to assemble passenger vehicles for TC Subaru was effective yesterday until Dec 31, 2013.
"For 2013, we estimate the contribution to TCM's earnings to be between RM3 million and RM5 million, which is still very small in relation to its forecast bottomline of RM260 million for 2012 financial year," OSK added.
The research firm said it has maintained a "Neutral" call and earnings for the company as well as its fair value of RM4, which is pegged to 10 times financial year 2012 earnings per share in line with the sector average. -- BERNAMA
Company Name: TAN CHONG MOTOR HOLDINGS BHD
| Research House: OSK | Price Call: HOLD | Target Price: 4.00 |
Tan Chong Motor Assemblies (TCMA) Sdn Bhd's contract to assemble passenger vehicles for TC Subaru Sdn Bhd will raise the capacity utilisation of its Segambut plant by 15 per cent, said OSK Research.
Tan Chong Assemblies is a 70 per cent subsidiary of Tan Chong Motor Holdings Bhd (TCM) while TC Subaru is a subsidiary of Tan Chong International.
The plant is currently under-utilised since most of TCM's vehicles are now produced at the Serendah plant, OSK said.
"Hence, there could be further cost savings on unit fixed costs," it said in a research note today.
The contract to assemble passenger vehicles for TC Subaru was effective yesterday until Dec 31, 2013.
"For 2013, we estimate the contribution to TCM's earnings to be between RM3 million and RM5 million, which is still very small in relation to its forecast bottomline of RM260 million for 2012 financial year," OSK added.
The research firm said it has maintained a "Neutral" call and earnings for the company as well as its fair value of RM4, which is pegged to 10 times financial year 2012 earnings per share in line with the sector average. -- BERNAMA
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