Tan Chong Meeting
with Nicholas Tan (Head:
Strategy & Corp Planning) 20th
Dec 2012
1) Almera
- as at 18th Dec, sold 11,790
units.
-
Surprisingly the higher specs RM79,800 car
is selling well making up 37% of total sold. This caused some issues as TCHONG
produced more cars with lower end specs.
-
Gross margins is relatively low at RM5,000
per car.
-
But there are plans to push up prices by
about RM3000 after CNY.
-
Seeing some cannibalisation for Sylphy with
sales falling below 100 units per month compared to closer to 200 units per
month.
2) New car rollouts
-
Evalia which is due to roll out in 2nd
2013 will be a direct competitor to Toyota’s Avanza. Management is hoping for
the same impact as Almera.
-
New X-trail with 3 rows seating.
-
Datsun – expected to be launched by 2014
with market segment targeted similarly to Myvi. Price will be around RM50k.
3) Regionals
-
Vietnam new plant will be in full swing by
April 2013. Capacity is 19,800 units.
-
Part of management’s plans is to assemble
majority of its work in cheaper labour countries such as Vietnam, Cambodia and
export to Malaysia for final assembly.
4) Segambut land
-
Management has submitted DO but do not
intend to develop at least until 2017. This would be inline with the new
exhibition centre build by Naza that is expected to be completed by 2015-16.
MRT first line would also be completed by 2016.
-
Plan is for a mixed development with up to
8 accesses to ease traffic congestion worries for the project.
5) Targets & plans
-
Company targets to sell 56-60k cars for
FY13 with 36k coming from Almera.
-
By 2014-15 management targets 30% profits
from regionals.
-
CAPEX will raise to RM400mil from RM250mil
this year to expand its plant capacity.
-
Showrooms will be reorganised with passenger
cars separated from trucks and commercial vehicles.
6) Conclusion: Buy TP: RM5.30. Currently
trades at FY13PE 10x vs 5 years average of 12x. Earnings are expected to see
significant gains with the roll out of Almera. FY14 is expected to see another
sharp rise upon the introduction of Datsun and Evalia while TChong gains
traction in Vietnam.