Broker: Maybank Investment Bank Berhad
Date of Report: September 1, 2025
Tan Chong Motor Faces Uphill Battle: Persistent Losses and Weak Outlook Shape 2025 Investor Sentiment
Executive Summary: Tan Chong Motor’s Financial Struggles Continue
Tan Chong Motor (TCM), the franchise holder for Nissan in Malaysia and Indo-China, Renault in Malaysia, and MG in Vietnam, remains in the red as the company reported deepening losses for the first half of 2025. With domestic sales under pressure, intensifying competition, and little visibility for major catalysts, the outlook remains challenging. Maybank Investment Bank maintains a SELL rating, lowering the target price to MYR0.36.
Key Highlights and Analyst Actions
- Core net loss (CNL) of MYR60.3 million for 1H25, matching full-year loss forecasts.
- Revenue down 2% YoY, driven by a 26% plunge in Malaysian Nissan sales.
- EBITDA margins under pressure due to forex losses and lackluster product demand.
- Target price (TP) cut to MYR0.36 from MYR0.38, maintaining a SELL stance.
- Potential upside catalysts include new product launches or contract assembly wins, but visibility remains limited.
Financial Performance: Losses Deepen Amid Weak Sales
| Metric |
2Q25 |
1Q25 |
2Q24 |
6M25 |
6M24 |
YoY Change |
| Revenue (MYR m) |
538.8 |
553.0 |
545.1 |
1,091.8 |
1,108.8 |
-1.5% |
| EBITDA (MYR m) |
-11.6 |
57.4 |
9.2 |
45.8 |
41.4 |
+10.8% |
| Core Net Loss (MYR m) |
-15.8 |
-44.5 |
-32.9 |
-60.3 |
-51.3 |
+17.6% |
| Nissan Car Sales (units) |
1,584 |
1,811 |
2,301 |
3,395 |
4,602 |
-26.2% |
Segment Analysis: Revenue and Margins by Geography and Division
- Malaysia: Revenue for 1H25 fell 6.9% YoY to MYR981.8m. EBITDA dropped to MYR55.8m (from MYR69.5m in 6M24), with margins weakening.
- Vietnam: Revenue surged to MYR42.0m (from MYR9.0m in 6M24), but the segment continued to post negative EBITDA (-MYR16.5m).
- Other Markets (Cambodia, Laos, Myanmar): Revenue grew 45.7% YoY to MYR68.0m, with EBITDA turning positive at MYR6.5m (vs. -MYR3.2m in 6M24).
| Region |
6M25 Revenue (MYR m) |
6M24 Revenue (MYR m) |
YoY Change (%) |
6M25 EBITDA (MYR m) |
6M24 EBITDA (MYR m) |
| Malaysia |
981.8 |
1,054.1 |
-6.9% |
55.8 |
69.5 |
| Vietnam |
42.0 |
9.0 |
+366.7% |
-16.5 |
-24.9 |
| Others |
68.0 |
45.7 |
+48.6% |
6.5 |
-3.2 |
Core Challenges: Weak Product Appeal and Rising Competition
- Domestic Nissan sales fell sharply by 26% YoY in 1H25 to just 3,395 units.
- Vietnam and Indo-China operations saw revenue growth but continued to operate at a loss.
- EBITDA margin contraction was attributed to forex losses and soft product demand.
- Company’s landbank monetization efforts have not translated into shareholder returns, as proceeds are channeled into working capital and capex, which may be value destructive if losses persist.
Quarter-on-Quarter Performance: Some Margin Relief, but Losses Remain
While group revenue slipped 2.6% QoQ in 2Q25, the core net loss narrowed to MYR15.8m in 2Q25 from MYR44.5m in 1Q25. This improvement was due to the exclusion of one-off items (notably, a MYR42.5m unrealised forex loss and impairment/write-offs in 2Q25 versus a MYR48.6m fair value gain on investment properties in 1Q25).
Share Price Performance and Valuation Metrics
- Share price as of report: MYR0.59
- 12-month target price: MYR0.36 (-38% downside)
- Price-to-book value (PBV): 0.1x–0.2x
- Market capitalization: MYR393.1 million
- No dividends declared since FY23.
Key Shareholders
- Tan Chong Consolidated Sdn. Bhd.: 39.3%
- Nissan Motor Co., Ltd.: 5.6%
- Employees Provident Fund: 5.4%
Summary of Financial Projections
| Metric |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue (MYR m) |
2,533 |
2,084 |
2,118 |
2,154 |
2,190 |
| Core Net Profit (MYR m) |
-126 |
-190 |
-147 |
-143 |
-140 |
| Core EPS (sen) |
-19.6 |
-29.5 |
-22.9 |
-22.3 |
-21.8 |
| ROAE (%) |
-4.5 |
-7.9 |
-5.8 |
-6.0 |
-6.1 |
| Net Gearing (%) |
17.3 |
19.9 |
23.0 |
26.8 |
31.1 |
Balance Sheet and Cash Flow Overview
- As of FY25E, cash and short-term investments are forecast at MYR417m, with net gearing projected to rise steadily through FY27E.
- Capex remains stable at MYR80m per year, with free cash flow negative throughout the forecast period.
- Inventory levels and receivables are expected to decline gradually, reflecting lower sales volumes and tighter working capital management.
Key Risks and Potential Catalysts
Risks:
- Sustained weak consumer sentiment and lackluster product launches could further depress earnings.
- Forex volatility remains a major risk to profitability.
- Execution risks, cost overruns, and absence of major new orders may intensify losses.
Catalysts:
- Any successful new model launches or contract assembly wins.
- Operational turnaround in overseas markets.
- Improvements in inventory and cost management.
Valuation and Investment Recommendation
- Maybank Investment Bank retains a SELL rating on Tan Chong Motor, with a target price of MYR0.36, reflecting a lack of visible catalysts and ongoing operational headwinds.
- Current valuation is pegged at a low 0.1x PBV, signifying market skepticism regarding turnaround prospects.
Conclusion: What Should Investors Watch?
Tan Chong Motor’s persistent losses, declining sales, and margin pressures signal a tough road ahead. Investors are advised to monitor for any signs of product revitalization, contract wins, or operational improvements, but for now, the risk-reward profile remains unfavorable.
Company at a Glance
- Major Brands: Nissan (Malaysia, Indo-China), Renault (Malaysia), MG (Vietnam)
- Market Cap: MYR393.1 million
- Franchise Reach: Malaysia, Vietnam, Cambodia, Laos, Myanmar
- Recent Share Price: MYR0.59
- Target Price (12M): MYR0.36
- Dividend Yield: 0%
