KUALA LUMPUR: Tan Chong Motor Holdings' (TCM) earnings are expected to improve, with the soon-to-launch Nissan Almera being the saviour, after recording its fifth consecutive disappointing quarter.
Research house OSK Research said it anticipated sales to be stronger over the ensuing quarters ahead of the festive season coupled with the boost in volume from the upcoming launch of the Almera sometime next month.
"TCM's first B-segment offering, the Almera will be priced competitively between RM70,000 and RM85,000 compared with its Japanese peers, Toyota Vios and Honda City.
"We strongly believe that sales can be encouraging. We project annual sales to be around 9,000 units for the financial year 2013, which may be conservative.
"Given that capital expenditure for this line is at RM10 million, we reckon margins will be low at the initial stage due to its localisation, although it should progressively improve over time," it said in a research note.
Echoing the same view, MIDF Research said TCM had already accepted bookings for the Almera and the response had been encouraging.
"It could be a challenge for the Almera to outdo sales expectation given the highly competitive B-Segment and the market preference towards Toyota and Honda brands," it said.
However, financial year 2012's earnings may pose a downside risk due to the Indochina operations, especially in Vietnam, which are still in red.
"Meanwhile, we expect the financial year 2012 earnings to be driven by the Almera," MIDF said.
-Bernama