Posted on July 31, 2013, Wednesday
KUCHING: The quantum improvements in its product quality and variety will help Tan Chong Motor Holding Bhd (Tan Chong) sustain its recent gains in market share, with its key model the new Grand Livina due to be launched soon while, its investments in frontier markets in Myanmar and Indo-China will continue to offer long-term upside.
RHB Research Institute Sdn Bhd (RHB Research) noted in its research report that Tan Chong has secured exclusive distribution rights for completely built-up vehicles in Myanmar. The initial term of the agreement will be for five years, with automatic extension for another year.
Myanmar is probably the last frontier in Asia for consumer goods. The country has a population twice the size of Malaysia at 60 million with a gross domestic product (GDP) per capita growth of 24 per cent compound annual growth rate (CAGR) from 2008 to 2012, although the absolute per capita income remained low at US$824 as at 2012 noted the research house.
"As the country emerges from a self-imposed isolation and opens up to trade and new investments, we expect household income in Myanmar to continue rising at a strong pace going forward, which should translate into surging demand for consumer durables."
Tan Chong also expects to incur working capital of just US$2.5 million in the first three years of operation of the new business. With much of the advanced groundwork and planning already in place, vehicle distribution will commence in third quarter 2013 (3Q13) with projected sales volume of 300 units per year.
In addition, RHB Research noted that Tan Chong is slated to set up a vehicle servicing network concurrently. Contributions in the next few years will likely be modest, although the long-term potential is enormous.
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Source: http://www.news.myanmaronlinecentre.com/2013/07/31/myanmar-to-offer-long-term-upside-for-tan-chong/
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