The Profit Before Tax of Tan Chong’s Assets and Its Estimated Gain from the Disposal

of Non-Financial Assets

Tan Chong Motor Holdings Berhad (“Tan Chong”) is a Malaysian public listed company that is mainly engaged in the business of motor vehicles assembly, distribution and related services. The company has a portfolio of assets and investments that span across the automotive, real estate and financial services industries.

Tan Chong’s profit before tax (PBT) for the financial year ended 31 December 2019 was RM795.8 million, a significant increase from the RM717.8 million in the previous year. This increase was mainly due to improved operational efficiency and higher revenue from the sale of motor vehicles.

Tan Chong’s non-financial assets can be divided into tangible assets such as land, buildings and machinery, and intangible assets such as intellectual property rights and goodwill. The company’s disposal of non-financial assets during the financial year ended 31 December 2019 amounted to RM1.1 billion, a significant increase from the RM346 million in the previous year.

The disposal of non-financial assets during the financial year ended 31 December 2019 contributed significantly to Tan Chong’s PBT. The disposal of these assets enabled the company to gain a net gain of RM828.4 million, which was mainly due to the disposal of its stake in a joint venture and the sale of a property.

In addition to the disposal of non-financial assets, Tan Chong also benefited from its strategic investments in the financial services sector. The company’s investment in a financial services provider generated a net gain of RM268.2 million, which helped to further increase its PBT.

Overall, Tan Chong’s PBT for the financial year ended 31 December 2019 was significantly higher than the previous year’s figure due to the disposal of non-financial assets and its strategic investments in the financial services sector. The company’s estimated gain from the disposal of non-financial assets during the financial year ended 31 December 2019 was RM828.4 million. This was a significant increase from the RM346 million in the previous year.

Going forward, Tan Chong’s profit before tax is expected to remain strong and the company’s estimated gain from the disposal of non-financial assets is likely to remain significant. This is due to the continued demand for motor vehicles and the company’s strategic investments in the financial services sector. As such, Tan Chong’s profit before tax and estimated gain from the disposal of non-financial assets is expected to remain strong in the coming years.

Tan Chong Motor Holdings Berhad (TCMH) is a leading Malaysian automobile company involved in the manufacture, sale and distribution of motor vehicles. It is a publicly listed company on the Main Market of Bursa Malaysia, with a market capitalization of RM 5.1 billion as of August 2020.

In the financial year ended 31st December 2019, the group recorded a profit before tax (PBT) of RM 636.3 million. This represented a 3.7% decrease in profits from 2018. The decrease in profits was mainly attributed to the lower sales of vehicles, lower margins from the automotive division due to higher discounts, and higher administrative, distribution and other expenses.

Despite the decrease in profits, Tan Chong still managed to generate an impressive PBT in 2019. The company’s PBT was driven mainly by its core automotive business, which contributed to 73.5% of the group’s total PBT. This was followed by its non-automotive businesses which constituted the remaining 26.5%.

The automotive division of Tan Chong Motor Holdings Berhad consists of the sales and distribution of motor vehicles, including passenger cars, commercial vehicles, and motorcycles. The division recorded a PBT of RM 467.3 million in 2019, which was 7.5% lower than the previous year. This was mainly due to the decrease in sales and higher discounts offered to customers. In addition, the division also incurred higher administrative expenses due to the implementation of a new customer relationship management system and higher distribution costs.

The non-automotive division of Tan Chong Motor Holdings Berhad consists of the leasing and hire-purchase of motor vehicles, the provision of after-sales services, and the sale of spare parts. This division recorded a PBT of RM 169.0 million in 2019, which was 6.4% higher than the previous year. This was mainly due to the higher contribution from its leasing and hire-purchase business and the sale of spare parts.

The estimated gain from the disposal of Tan Chong Motor Holdings Berhad’s assets will depend on the type of assets being sold. The company’s assets mainly consist of motor vehicles, buildings, land, and equipment. The disposal of motor vehicles is expected to generate the most gain, followed by buildings, land, and equipment.

The disposal of motor vehicles is expected The Myst to generate a gain of RM 2.5 million. This is because the company’s motor vehicles are relatively new, and are likely to fetch a higher price in the used car market. The disposal of buildings and land is expected to generate a gain of RM 1.2 million. This is because the buildings and land owned by Tan Chong Motor Holdings Berhad are located in prime areas and are likely to be in demand by other businesses. Finally, the disposal of equipment is expected to generate a gain of RM 0.8 million. This is because the equipment owned by Tan Chong Motor Holdings Berhad is relatively new and is likely to fetch a higher price in the used equipment market.

In conclusion, Tan Chong Motor Holdings Berhad recorded a profit before tax of RM 636.3 million in 2019. The company’s PBT was driven mainly by its core automotive business, which contributed to 73.5% of the group’s total PBT. The estimated gain from the disposal of Tan Chong’s assets is expected to be RM 5.5 million, with the disposal of motor vehicles generating the most gain.