Tan Chong International Announces Renewal of Continuing Connected Transactions and Annual Caps for 2026-2028

Tan Chong International Announces Renewal of Multiple Continuing Connected Transactions

Key Highlights for Investors

Renewal of Major Related Party Transactions: Tan Chong International Limited (“TCIL”) has announced the renewal and extension of a series of continuing connected transactions with its related parties for a further three years, starting from 1 January 2026 to 31 December 2028.
Significant Aggregated Annual Cap: The aggregated annual cap for all these transactions is set at HK\$46.17 million for 2026, HK\$46.8 million for 2027, and HK\$47.11 million for 2028. These are material numbers relative to the Company’s size and will be closely watched by the market.
Price Sensitive: Shareholder Approval Not Required, but Reporting Is: As the highest percentage ratio for these transactions is more than 0.1% but less than 5%, the deals are subject to disclosure (reporting and announcement) requirements under the Hong Kong Listing Rules, but do not require circulars or independent shareholder approval, which reduces deal uncertainty.
Key Connected Parties: The transactions involve recurring business with Tan Chong Motor Holdings Berhad (“TCMH”), APM Automotive Holdings Berhad (“APM”), Warisan TC Holdings Berhad (“WTCH”), and related subsidiaries. These are all entities in which controlling shareholder Tan Chong Consolidated Sdn. Bhd. (“TCC”) has a material interest.

Detailed Breakdown of the Continuing Connected Transactions

1. Renewal of TCMH Agreements

The Group will continue to engage in the sale and purchase of motor parts and accessories with the TCMH Group. The new agreements will cover a three-year period, with payments to be settled in cash within 30 days of invoice. Pricing will be determined by market prices, reference to similar third-party transactions, or on a cost-plus basis (8-10% margin for sales). The annual cap for these transactions is set at HK\$38.24 million per year. Historical transaction values were HK\$16.86 million (2023), HK\$12.13 million (2024), and HK\$10.57 million in the first half of 2025, implying a significant increase in cap for future years.

Key Shareholder Impact: The sizable increase in transaction cap and reliance on related parties for supply and demand may affect the Company’s independence and could be viewed as both a risk and an opportunity for stable supply chains.

2. Renewal of APM Agreements

TC Subaru (a wholly-owned subsidiary) will continue to acquire spare parts from APM subsidiaries for three years. Payment is due within 30 days of the bill of lading date. Pricing is based on market comparables or cost, with safeguards to ensure no less favorable terms than those available to independent third parties. The annual cap is HK\$940,000 per year, up from historical levels (HK\$379,000 in 2023, HK\$523,000 in 2024, HK\$164,500 in the first half of 2025).

Noteworthy: This ensures supply for Subaru dealers in Malaysia, where APM subsidiaries are approved suppliers of Subaru parts, reinforcing the Group’s aftersales business.

3. Renewal of APM2 Agreements

The Group will continue to sell and rent vehicles, material handling equipment, and forklifts to the APM Group. Payment terms are 15 to 30 days. Pricing is market-based or on a cost-plus basis (5-25% margin). The annual cap is HK\$310,000, compared to historical transaction amounts of HK\$107,000 (2023), HK\$102,000 (2024), and HK\$50,500 (first half 2025).

Potential Impact: While the cap is modest, this segment diversifies Group revenue and leverages relationships with connected parties for additional income.

4. Renewal of TCIMSB and TCIMSB2 Agreements

TCIMSB Agreement: NJTC (a PRC subsidiary) will continue to sell motor parts to TCIMSB (Malaysia), with an 8% margin over cost. The annual cap rises from HK\$263,000 (2023) to HK\$860,000 (2026) and HK\$1.29 million (2027, 2028).
TCIMSB2 Agreement: TCIMVN (Vietnam) will continue to purchase material handling equipment from TCIMSB, with an annual cap of HK\$3 million (historical transaction: HK\$504,000 for the first half of 2025).

Investor Note: The sharp increase in permitted transaction volumes signals anticipated growth in the Group’s industrial equipment segments in China and Vietnam.

5. TCIMSB3 Agreement

TCIS (Thailand) will purchase new and used forklifts and equipment from TCIMSB for the first time, with annual caps of HK\$420,000 (2026), HK\$620,000 (2027), and HK\$930,000 (2028). No historical transactions between the parties exist, indicating a new business avenue.

Impact: This marks a geographic expansion of the Group’s industrial equipment business into Thailand, which could be a strategic growth segment.

6. TCEAS Agreement

TC Subaru and TCEAS (Malaysia) will transact for the sale of parts and reimbursement for repair/workshop services for Subaru customers. The annual cap is HK\$2.4 million per year, with no prior history of such transactions.

Investor Takeaway: This formalizes internal aftersales support, potentially enhancing service quality and customer satisfaction, supporting Subaru’s brand in Malaysia.

Governance and Internal Controls

All transactions are priced according to arm’s length principles, with regular benchmarking against market rates and third-party comparables to ensure fairness.
The Group has instituted internal controls, including half-yearly reporting, regular internal reviews, and annual reviews by auditors and independent directors, to monitor compliance and prevent exceeding caps or uncompetitive pricing.
Directors with interests in TCC (notably Chairman Mr. Tan Eng Soon and Mr. Tan Kheng Leong) abstained from voting on these resolutions, ensuring procedural fairness in Board approvals.

Strategic and Shareholder Implications

Strategic Partnerships: These renewals reinforce long-standing, strategic relationships with connected parties, providing supply chain security and sales channels across multiple regional markets.
Potential Price Sensitivity: The significant increase in transaction caps, especially in the TCMH, TCIMSB, and TCIMSB2 transactions, suggests management expects strong growth in demand or new business opportunities. This could affect market perception of the Group’s growth prospects.
Shareholder Reassurance: While the transactions do not require a shareholder vote, the Company’s commitment to fair pricing, transparency, and internal controls is intended to safeguard minority shareholders’ interests.

Conclusion

For investors: The renewal of these continuing connected transactions is material for Tan Chong International, as it underpins major supply, sales, and service relationships in the Group’s automotive and industrial equipment businesses throughout Asia. The substantial increases in transaction caps in several areas may be interpreted as management confidence in future growth, but also increase the Group’s exposure to related-party risk. Investors should monitor the execution and performance of these transactions and any subsequent market disclosures for further impact on the Company’s business and share price.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with professional advisers before making investment decisions. The information is based on official public disclosures as of the date above and may be subject to future updates or changes.