Tan Chong International (0693.HK)

[¯|_(ツ)_/¯]

0693@210
TCIL positive profit alert - starts liao?
https://links.sgx.com/FileOpen/202107080...eID=674066


Stay home and stay safe, everyone.

[weijian]

'Our factory and warehouse located at 798 and 800 Upper Bukit Timah Road has a total leasehold land area of 198,976 square feet until 6 April 2082. The property has the potential to be developed for residential use. We are considering the timing for redevelopment carefully in light of the various cooling measures in the property market promulgated by the Singapore government.'

The book value of its equity investment and property investment roughly equates to its market cap. So you get the business for free. But then, the business isn't exactly thriving.

798/800 Upper Bukit Timah Road was finally sold to CDL in late 2021 (property upcycle) and will be demolished/redeveloped by CDL into a condo (TOP 2029). So kudos that something has finally been done and the sale looks to be selling into the upcycle so far. The unfortunate thing is that the proceeds will be used as working capital.

Looking at AR22, it is alarming to see that Nissan/Subaru (mid tier brands) have been losing its attractiveness. From ~10.1k cars sold in Spore and 21k cars in other regions in 2018, it has reduced to 1.6k (80% decline) and 15.7 (25% decline) in FY22. For the alarming decline in Spore sales, the high COE price is probably the culprit? Looking at the breakdown by segment, only Taiwan looks to be sustaining its advantages and profitability for other regions.

[weijian]

TCI's 1H24 management review has lots of worries for TCI OPMIs.

(1) Its most promising market Taiwan has a 50% drop in car sales YoY with the overall TIV relatively stable.
(2) It is discontinuing its Subaru CKD plant at Thailand and will transit to CBU model. CBUs are not competitive in the mid tier level in our region here, especially with Thailand/Msia/Indonesia having assembly ops for all the mid tier brands.

The current EV-ICE war is reminiscent of the ride-hailing wars that started about a decade ago. One has to avoid been the participants of the war, and then think of how to participate in the war via selling bullets to the war participants.

Management Review

The Group's revenue for the first half of 2024 was HK$6.59 billion, a 9.9% decline from HK$7.32 billion in the same period of 2023. After-tax profit for the first half of 2024 was HK$28 million, compared to HK$187.4 million in the corresponding period of 2023. The Group experienced a severe drop in sales in the automotive division for the first half of 2024. However, its financial services subsidiary, ETHOZ Group, and its publicly listed logistics subsidiary, ZERO showed some growth compared to the previous corresponding period.

With the influx of multiple new brands into the Taiwan automotive market intensifying competition, the Group’s Subaru operations experienced a 51% decline in sales in the first half of 2024 compared to the same period in 2023.

The Group has announced the discontinuation of its joint venture factory in Thailand on 24 May 2024. The Thailand factory will cease production by the end of 2024. The Group will transition the Complete Knock Down (“CKD”) markets of Malaysia, Thailand, Vietnam, and Cambodia to a Complete Build Up (“CBU”) model from Japan progressively from 2025.

TCI 1H24:
https://links.sgx.com/FileOpen/202409120...eID=818652