Tan Chong warns of lower full-year profit on lower vehicle sales

AUTOMOBILE firm Tan Chong International warned of a decrease in profit attributable to shareholders for the year ended Dec 31, 2019 due to lower vehicle sales, in a Singapore Exchange filing after market close on Friday.

It expects "a material decrease" compared to the HK$600.9 million (S$104.3 million) figure in the previous year, due to a "substantial decrease" in vehicle sales volume in its key markets of Singapore, Malaysia, Taiwan and China.

Profit was also hit by the high initial start-up costs and teething problems at its new car plant in Thailand, which started production on Feb 26, 2019.

"Despite this profit decline, the group's business operations remain relatively stable and the group's balance sheet continues to be in a healthy state," said Tan Chong.

It added that the announcement represented a preliminary assessment. Financial information of its subsidiary Zero Co, listed on the second section of the Tokyo Stock Exchange, was not yet conclusive and subject to reviews by management. The group is still in the process of preparing its consolidated final results for the year, including other comprehensive income items, with the final results announcement expected to be published before the end of March.

Tan Chong also expects to record an unaudited unrealised gain of HK$309 million on its investments designated as at fair value through other comprehensive income for the year, as compared to an audited unrealised loss of HK$931 million in the previous year.

The unrealised gain will be reported in the group's other comprehensive income statement for the period and is not expected to be reclassified to its consolidated statement of profit or loss.

Tan Chong said shareholders and potential investors should exercise caution when dealing in its securities.

Tan Chong shares closed up one Hong Kong cent or 0.47 per cent at HK$2.14 on Friday before the announcement.