SINGAPORE (THE BUSINESS TIMES) – Auto dealer Tan Chong International reported earnings of HK$78.6 million (S$13.7 million) for the first half of 2021, swinging back into profit following a HK$46.1 million net loss in the same period last year.
The company’s revenue for the period was nearly HK$6.2 billion, an increase of 6 per cent from that in the first half of 2020, according to its interim results for the six months ended June 30.
Its directors have declared an interim dividend of 1.5 Hong Kong cent per share for H1 2021.
Tan Chong said the automotive business of the group remains challenging, with the business environment remaining fluid amid new strains of Covid-19 as well as geopolitical factors.
It added that measures to curb Covid-19, including lockdowns, had caused “almost total suspension” of the group’s operations in several of the 11 Asia-Pacific markets in which it operates.
However, its non-automotive segment was “satisfactory”, helped by the disposal gain in one of the group’s properties in Singapore that it no longer requires, the mainboard-listed company said.
Net asset per share as of June 30 was HK$5.95, a decrease from the HK$6.05 recorded end-December 2020.
In Singapore, the group’s Subaru business continues to be affected by stringent vehicle emission surcharges, Tan Chong said. It recorded a “double-digit decline” in sales volume from the figure in the same period last year, and the second half-year is likely to be “equally challenging” with a shrinking Certificate of Entitlement quota, the company added.
Sales of Subaru grew in Hong Kong, the market least affected by Covid-19 in the region.
Its car business declined in China, Taiwan and the Philippines in the first half-year, but it is expecting recovery in the second half of the year.
Similarly, its business in Thailand and Malaysia should improve in the second half-year after taking a dip in the first half; recovery in Vietnam and Cambodia is expected to be slow.
It is less optimistic about its transportation logistics operations in Japan, where it is represented by Zero. Revenue and net profit fell 12 per cent and 72 per cent in the first half-year, compared with the corresponding period last year.
Despite a gradual recovery from the impact of Covid-19, Zero is expecting sales revenue to decrease in its next financial year due to the semiconductor shortage, as well as the proliferation of the Delta variant of Covid-19.
Tan Chong expects to have to deal with “increased risk” in the region’s geopolitical and global trade environment.
“Together with the rapidly-changing automotive industry safety, vehicle emissions policies and swift progression towards greener vehicles, challenges to the group’s main vehicle businesses remain,” the company said.
It added that another potential threat is the trend of people seeking ride-hailing services rather than buying their own vehicles.
At the same time, the fluidity wrought by Covid-19 prevents the group from making a “meaningful prediction” of the full financial impact to its overall performance this year, it said.
“The group wishes to highlight that a prolonged and severe Covid-19 crisis will have a material effect on the group’s year-end results,” it added.
Tan Chong shares closed flat at HK$2.05 on Tuesday (Aug 24).