• We maintain our BUY call on Tan Chong Motor (TCM) with an unchanged FV of RM2.18 based on an FY20F PE of 12.0x.

• Yesterday, we attended the official launch of the Nissan LEAF. Key updates are as follows: 1) The all-new Nissan LEAF is one of the top-selling electric vehicles (EVs) in the world. It comes in a single variant and is priced at RM189.0K. The management strongly reiterated that the LEAF will not be a volume-based model and there is no guidance on sales target and booking numbers for the said vehicle. 2) The updated all-new Nissan LEAF is a CBU model from Japan and is able to travel at an improved distance of ~310km vs. ~160km for the previous model. There are 17 charging hubs nationwide and these are free of charge for Nissan LEAF users for easy and convenient charging. 3) TCM guided that the purpose of bringing in the LEAF is to introduce the flagship vehicle, and it is targeted at a niche market. Nissan Japan aims to continue spearheading the EV market as it believes this will be the trend going forward — fully autonomous and electric. 4) On a separate note, we are excited over the introduction of the upcoming 3 new models in FY20; namely the all-new N18 Nissan Almera, followed by the Nissan Kicks B-segment crossover and the fourth generation Nissan Sylphy.

• We believe TCM will continue to do well going forward based on strong Nissan sales, prospects of new models to further fortify its margins and the rebuilding of the Nissan brand. Risk factors include a continuing spike in inventory levels, a severe weakening of the ringgit and a worsening of its Indochina operations.

Source: AmInvest Research - 24 Jul 2019