Full-year profit falls 65% at Tan Chong International due to poor vehicle sales

CAR company Tan Chong International posted a net profit plunge of 65 per cent for the year ended Dec 31, 2019 to HK$212.93 million (S$39.74 million) compared to a year ago period.

The group had in January warned of a decrease in profit attributable to shareholders due to lower vehicle sales in its key markets of Singapore, Malaysia, Taiwan and China.

It recorded a 7.6 per cent decrease in revenue to HK$14.53 billion. The decline was primarily due to sales volume reduction of 16 per cent in its motor vehicle distribution and retail division, according to the firm's filing to the Singapore Exchange (SGX).

Its market in Singapore had a 45 per cent fall in vehicle sale units on the back of reduced COE (Certificates of Entitlement) quota and stricter emission standard. Sales in other markets in China, Hong Kong, Malaysia and Taiwan also fared poorly.

Earnings per share stood at 11 Hong Kong cents, against 30 Hong Kong cents the previous year while net asset value was HK$6.23 a share, up from HK$6.03 as at Dec 31, 2018.

An interim dividend of two Hong Kong cents a share has been declared, compared with 2.5 Hong Kong cents previously.

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Looking ahead, the group expects vehicle sales to be further impacted by "multi-faceted problems of world trade, global health issues and repositioning of major world powers".

These include issues such as the rapidly changing automotive industry safety standards and vehicle emissions policies, and the global trend of customers meeting their transportation needs via services provided by ride hailing companies as opposed to purchasing or owning their own vehicles, according to Tan Chong.

However, it will continue to invest in the development of its motor and commercial vehicle businesses as it scales up its dealer and retail networks, supply chain logistics infrastructure and brand presence.

Meanwhile, the group highlighted that a prolonged Covid-19 crisis will have material effect on its FY2020 financial results but it is currently "unable to assess the full financial impact".

Shares of Tan Chong closed flat at HK$1.68 on Tuesday.