TanChong ... May10

While the tan family dispute flared, management continued to carry out its duties and fulfill its responsibilities, anchoring operations with roots planted on thrift and industry.

Hence, TCMH could ramp up sales, profit margins and ROE in 2008. It is notable that, in its record 2Q2008, TCMH showed it could achieve a high ROE above 20%.

While the family dispute was finally settled in 2009, the company’s financial results were stalled by the recession. Now (April 2010), it is set to deliver the 2008 performance level again, when it had the highest efficiency in the use of capital in the industry.

The group comprises four listed companies – TCMH, APM, Warisan TC Holdings and TCIL.

TCMH made a net profit of rm95 million in its 2Q2008.

Even as TCMH hones its margins and ROEs it will scale up sales with a broader mix of car models.

At the same time, it is transforming into a regional supply chain manager for Nissan. It has appointed sole distributor of Nissan motor vehicles in Cambodia in March 2010 and Laos in April 2010. The group awarded a licence in 2009 to assemble Nissan motor vehicles in Vietnam.

Now that the two Tan families have made peace, the group can now commit substantial financial resources to expand into Indo China and to make any acquisitions that are attractive.

APM …

It has successfully carved a niche for itself, serving the whole car industry. It sales to TCMH are less than 10% of its total.

For its shareholders, APM has built up a large pile cash – some RM260 million at the end of 2009 when its free cash flow was R65 million. Its cash reserves are going to enable it to expand organically and through acquisitions in the domestic and regional markets.



Warisan …

Management may need more times as it is not very profitable. Many strategies are afoot to scale up its business and profitability. It is believed this will include the trading house taking up a wider range of franchises, including for the first time, in the motor vehicle sector.

However it is not faring as well as its sister companies in the Tan Chong group. The financial crisis took quite a heavy toll on its earnings amid the slowdown in consumer demand and construction activities.

Its core business is rather diversified, comprising travel services, car rentals and distribution of construction equipment and machinery. It also distributes consumer products.

The travel and car rental division was the biggest contributor to its revenue in its latest financial year.

The diversification does not seem to have helped mitigate the harsh economic conditions during the height of global downturn in FY2009.

It had cash of RM66 million with long term liabilities of RM14 million.

TCIL ….

It operates multiple franchises in HK and Singapore.

TCIL distributes Nissan cars in Singapore, and Subaru cars in Singapore, HK and southern China, and trucks in Thailand. It also has significant business in property development and investment.

In addition, it is cash rich worth about RM1.2 billion.

Guoco has 18.1% stake in TCIL as at end 2009.