OSK Research remains bullish on Tan Chong Motor Holdings Bhd's prospects over the longer term as it embarks on structural changes that will rev up its volume and earnings.

In an investment research report today, OSK said Tan Chong's changes would see the volume and earnings up by a compound annual growth rate of 17 per cent and 35 per cent respectively over the next three years.

'While we expect vehicle sales to slow down in the second half of this year, Tan Chong has reassured us that the sales would meet our projections as it ramps up to two shifts to meet bookings in H2,' it said.

OSK said Tan Chong expected a rush of orders for August, which would subsequently see September sales soften and pick again in fourth quarter.

'Year-to-date, Tan Chong has sold 20,300 vehicle units and its management expects to at least sell 500 units a month of the new Teana model,' it said.

It said Tan Chong remained one of its top five big-/mid-capitalised stock picks for the second quarter.

'We expect 2012 earnings to increase to RM375 million from RM255.5 million in financial year 2010 respectively, which we think is still conservative as its Indochina foray may take off sooner and perform better than expected,' it said. -- Bernama