Tan Chong International’s H1 net profit soars on property disposal

AUTO dealer Tan Chong International’s net profit for the first half of 2022 increased to HK$130.6 million (S$23.2 million) from HK$27.1 million, a 381 per cent jump from the same period a year ago.

The huge increase was a result of the disposal of 1 of the company’s properties in Singapore, as previously announced in an earlier bourse filing on Jul 7.

It had said then that an indirect wholly-owned subsidiary of the company had granted a call option to a unit of City Developments to purchase 2 properties along Upper Bukit Timah Road for S$126.3 million in November last year. The call option was subsequently exercised on Apr 13, 2022.

Revenue for the 6-month period ended Jun 30 increased 5 per cent to HK$6.5 billion from HK$6.2 billion, said Tan Chong in a bourse filing on Monday (Aug 22).

Earnings before interests, taxes, depreciation and amortisation went up 14 per cent to HK$558 million from HK$489 million.

Operating profit came in at HK$271.2 million, with an operating profit margin of 4.2 per cent compared to the 2.9 per cent registered in the same period a year before.

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Net asset per share was HK$5.79, a decrease from HK$6 at the end of December last year.

Tan Chong’s directors have declared an interim dividend of HK2.5 cents per share for the first half of 2022.

It said that the company’s activities have been weighed down by widespread disruptions and operational challenges brought about from the Covid-19 pandemic.

“In China, strict lockdowns over extended periods in some cities caused abrupt standstills in certain factories and downstream supporting industries. Restrictions on air travel and stringent quarantine requirements in Hong Kong also took a considerable toll on consumer confidence and spending habits,” said the company in its financial report.

“On the global front, the Ukraine war brought about staggering fuel and food prices, triggering inflation across the world. Geopolitical uncertainties further impacted consumer activities, while businesses adopted a more cautious outlook in the face of fluctuating demand and unpredictable trends,” it added.

The group also foresees rising challenges to global trade activities, as changing automotive industry safety standards, evolving vehicle emissions policies and a swift progression towards greener vehicles pose significant challenges to its main vehicle businesses.

In addition, the global trend of ride hailing services has changed consumer mindsets about owning their vehicles.

Tan Chong said that the fluidity of Covid-19 prevents the group from making meaningful predictions and assessing the full financial impact of its overall performance for 2022.

“Looking forward, the group expects a brighter outlook for the second half of the year due to increased demand triggered by shortages of vehicle supplies. As vehicle deliveries begin to stabilise and demand remains robust, the group expects a stronger performance for the second half of the year,” it said.