Financial Analyst Report for Tan Chong International Limited (2024 Annual Results)
Business Description: Tan Chong International Limited is a diversified conglomerate with core business operations in motor vehicle distribution and dealership, heavy commercial vehicle and industrial equipment distribution, property rentals and development, transportation, and other operations including auto leasing, capital and equipment financing, and manufacturing of vehicle seats. The Group has a strong presence across several markets, including Singapore, China, Thailand, Japan, and other Southeast Asian countries.
Financial Statement Analysis:
Income Statement:
Revenue decreased by 8% year-over-year to HK$12.7 billion, primarily due to challenging conditions in the automotive division.
However, profit after tax increased significantly by 60% to HK$609.5 million, driven by strategic initiatives across the Group’s business portfolio.
EBITDA increased by 13.2% to HK$1.8 billion, and profit from operations grew by 27.1% to HK$1,090.3 million, with the operating profit margin improving to 8.6% from 6.2%.
Balance Sheet:
The Group’s net gearing ratio remained stable at 48.3% as of 31 December 2024, compared to 48.6% in the previous year.
Net asset value per share decreased slightly to HK$6.04 from HK$6.08 in 2023.
Cash Flow:
The Group generated strong cash flows, with cash and bank balances increasing to HK$2,242.9 million as of 31 December 2024, up from HK$1,909.3 million in the previous year.
Dividend:
The Board has proposed a final dividend of HK$0.055 per share, in addition to the interim dividend of HK$0.02 per share, resulting in a total dividend of HK$0.075 per share for the financial year 2024, consistent with the previous year.
Key Highlights:
The Group’s property division performed well, with a significant valuation gain on the Wilby Central property and ongoing renovations at Wilby Bukit Timah.
The vehicle transportation and logistics division in Japan (ZERO) reported a robust 71% improvement in net profit year-over-year.
The Group’s hire purchase and financing business continued to grow, with total loans and advances outstanding of HK$5.37 billion as of 31 December 2024.
The Group closed its Subaru manufacturing plant in Thailand at the end of 2024 and is actively pursuing asset optimization through potential disposal or long-term lease arrangements.
Recommendation: If currently holding the stock: Based on the strong financial performance, strategic initiatives, and stable financial position, we recommend holding the stock. The Group’s diversified business model and proactive approach to managing challenges in the automotive division suggest potential for continued growth and value creation.
If not currently holding the stock: We recommend considering an investment in Tan Chong International Limited. The Group’s resilience in the face of industry headwinds, coupled with its strategic focus on high-growth areas like property and transportation, make it an attractive investment opportunity. However, investors should closely monitor the Group’s performance in the automotive division, as it remains a significant part of the business.
Disclaimer: This report is based on the information provided in the 2024 annual results of Tan Chong International Limited. Investors should conduct their own due diligence and seek professional advice before making any investment decisions.
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