AMANAH Investment Bank Bhd (MIDF Research) has downgraded Tan Chong Motor Holdings Bhd to a ‘Sell’ from ‘Neutral’, citing concerns over its persistently challenging operating environment and recent share price rally.
The research house has maintained its target price at 34 sen, reflecting a significant downside from the current share price of 57 sen as of May 5, 2025.
While the group’s latest move to introduce the Chinese electric vehicle (EV) brand Wuling under the TQ Wuling name in Malaysia signals a push into the increasingly competitive EV market, MIDF Research remains cautious on near-term prospects.
“While we view this move as a positive effort to broaden its product portfolio, we do not anticipate meaningful volume contributions in the near term,” said the firm in a research note.
Tan Chong secured semi-knockdown (SKD) approval to locally assemble the compact electric hatchback TQ Wuling Bingo at its Segambut plant, which is currently operating at 50% or below capacity.
The Bingo, expected to launch in the fourth quarter of 2025 (4Q25), will be Tan Chong’s first Wuling model in Malaysia and could potentially be exported region- ally in future phases.
The launch marks a key addition to Tan Chong’s electrified lineup, which already includes the Nissan Leaf and the Kicks e-Power hybrid.
According to MIDF Research, the SKD assembly will require only light modifications and minimal capital outlay, leveraging existing battery EV (BEV) capabilities and infrastructure.
“The SKD exemption allows Tan Chong to locally assemble Wuling models while keeping capital expenditure minimal.” MIDF Research said.
“Limited incremental investment is needed for after-sales support, further smoothing the rollout.”
The Bingo is anticipated to be priced below RM100,000, positioning it directly against Perusahaan Otomobil Kedua Sdn Bhd (Perodua) upcoming A-segment EV, the eMO-II, and possibly appealing to buyers of B-segment EVs like the BYD Dolphin and Ora Good Cat.
Despite the EV push, MIDF Research expects Tan Chong to remain in the red through its forecast period.
The group is projected to post a core net loss of RM130.7 million in financial year 2025 (FY25), following an estimated loss of RM206.3 million in FY24.
“We believe the operating environment remains tough and expect the group to stay in the red throughout our forecast period,” MIDF Research said.
The expected total return over the next 12 months is -38.6%, factoring in both capital loss and dividend yield.
With more Wuling models in the pipeline and potential for regional expansion, Tan Chong’s longer-term prospects may improve but for now, the research house advises caution. — TMR
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