Yesterday, Tan Chong launched its B-segment model, the Nissan Almera, which is priced a little lower than expected and is 8% cheaper than the Toyota Vios, currently considered the most affordable non-national model in this segment. We see the Almera giving its B segment rivals a run for their money. The bookings have so far reached an impressive 2,000 units, considering that the price had yet to be disclosed earlier. We are valuing Tan Chong at a lower PE of 11x on its FY13 EPS (51.2 sen) to derive a fair value of RM5.63. Tan Chong is now our top sector pick.
A game changer. Tan Chong yesterday launched its B segment model, the Nissan Almera, as well as took the veil off the car’s highly-anticipated pricing. The Almera will come in three trim levels, at a price as low as RM66,800 for a base manual version and RM69,800 for the base automatic transmission (AT) version. Meanwhile, the standard V type (AT) and the high-end VL type will be priced at RM76,800 and RM79,800 respectively. Overall, the pricing of the Almera versions turned out to be lower than we had anticipated, which leads us to believe the cars will give their B segment rivals a run for their money. On average, the Almera’s three trim levels are 8% cheaper than the Toyota Vios, which is considered the most affordable non-national B segment model.
Cheaper, LARGER, and possibly nicer. The Almera is Nissan’s best-selling global sedan. Since its debut in US, Thailand and China, it has garnered sales of an astounding 500,000 units. The model’s main selling point is its generous space, which is comparable to the C-segment Toyota Altis in terms of wheel base length. It also reportedly as low on fuel consumption as the Vios. Management is targeting monthly sales of 1,000 units and is also allocating 1,200 units for the Vietnam market for 2013. Currently, Tan Chong has an annual capacity for 19,000 units of the Almera, which will also boast of having the highest localisation rate versus other models assembled by the company. Bookings as of yesterday stand at an impressive 2,000 units, considering that the price of the model was not even disclosed earlier. The waiting time for delivery is estimated at an average of two months. Tan Chong is looking to sell as many as 7,000 Almeras for 2012, much higher than our estimated number. We are projecting Nissan Almera sales of 3,000 units for 2012 and 12,000 units each for 2013 and 2014.
The competitive field. Without doubt, the non-national 1.5-litre and 1.6-litre segments are the most competitive as the market is saturated with many players (see Figure 1 overleaf). The Toyota Vios commands a 50% market share due to its high resale value and established brand, followed by Honda City at 30%. We see the Nissan Almera giving both models a good run for their money as it is comparable to a 1.8-litre car like the Toyota Altis, and may lure buyers on a tight budget who want a spacious car.
A game changer. Tan Chong yesterday launched its B segment model, the Nissan Almera, as well as took the veil off the car’s highly-anticipated pricing. The Almera will come in three trim levels, at a price as low as RM66,800 for a base manual version and RM69,800 for the base automatic transmission (AT) version. Meanwhile, the standard V type (AT) and the high-end VL type will be priced at RM76,800 and RM79,800 respectively. Overall, the pricing of the Almera versions turned out to be lower than we had anticipated, which leads us to believe the cars will give their B segment rivals a run for their money. On average, the Almera’s three trim levels are 8% cheaper than the Toyota Vios, which is considered the most affordable non-national B segment model.
Cheaper, LARGER, and possibly nicer. The Almera is Nissan’s best-selling global sedan. Since its debut in US, Thailand and China, it has garnered sales of an astounding 500,000 units. The model’s main selling point is its generous space, which is comparable to the C-segment Toyota Altis in terms of wheel base length. It also reportedly as low on fuel consumption as the Vios. Management is targeting monthly sales of 1,000 units and is also allocating 1,200 units for the Vietnam market for 2013. Currently, Tan Chong has an annual capacity for 19,000 units of the Almera, which will also boast of having the highest localisation rate versus other models assembled by the company. Bookings as of yesterday stand at an impressive 2,000 units, considering that the price of the model was not even disclosed earlier. The waiting time for delivery is estimated at an average of two months. Tan Chong is looking to sell as many as 7,000 Almeras for 2012, much higher than our estimated number. We are projecting Nissan Almera sales of 3,000 units for 2012 and 12,000 units each for 2013 and 2014.
The competitive field. Without doubt, the non-national 1.5-litre and 1.6-litre segments are the most competitive as the market is saturated with many players (see Figure 1 overleaf). The Toyota Vios commands a 50% market share due to its high resale value and established brand, followed by Honda City at 30%. We see the Nissan Almera giving both models a good run for their money as it is comparable to a 1.8-litre car like the Toyota Altis, and may lure buyers on a tight budget who want a spacious car.
Maintain BUY. We maintain our earnings forecasts. From a valuation standpoint, Tan Chong is currently trading at a 9x FY13 PE, which we find undervalued given the group’s promising prospects and the anticipated double-digit earnings growth for FY13 and FY14. We are valuing the stock at a lower PE of 11x on its FY13 EPS (51.2 sen), from which we derive a fair value of RM5.63. We think its share price has reached its support level and has nowhere to go but up. Within our auto coverage, Tan Chong lags behind its peers UMW and MBM, which have seen significant share price appreciation. In view of the 27% upside potential, Tan Chong is now our top pick in the auto sector.
Source: OSK
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