Thursday, 12 April 2012

CIMB Research maintains Neutral on Tan Chong, ups target price to RM4.75

KUALA LUMPUR (April 12): CIMB Research has maintained its Neutral Recommendation on Tan Chong Motor Holdings Bhd and said the key takeaways from its lunch meeting with Tan Chong’s management were 1) 1Q12 results could be weak, 2) assembly operations in Segambut could be halted as early as 2017, and 3) Tan Chong aims to triple vehicle sales during 2012-16.

In a note Thursday, CIMB Research said it was raising its target price for Tan Chong to RM4.75 from RM4.49.

“We retain our earnings estimates but raise our SOP-based target price for a higher target P/E of 9.4x (prev. 9.1x), still pegged to a 30% discount to our KLCI target P/E which has been raised to 13x from 12.6x. Maintain Neutral.

“We like DRB-Hicom for exposure to the auto sector,” it said.

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