Tan Chong International (693) H1 2024 earnings summary

Executive summary

• First half of 2024 saw an 85% decline in profits year-over-year, mainly due to underperformance in the automotive division and shrinking margins.

• Revenue dropped 9.9% to HK$6.59 billion compared to HK$7.32 billion in the same period of 2023.

• ETHOZ Group and ZERO Co., Ltd achieved profit increases of 17% and 24% respectively, highlighting portfolio diversity.

• EBITDA fell 25.3% to HK$583 million; operating profit margin dropped to 3.7% from 5.9% year-over-year.

• The group remains cautiously optimistic for the second half of 2024, expecting recovery in the automotive division.

Financial highlights

• Net profit after tax was HK$28 million, down from HK$187.4 million in the prior year period.

• Basic and diluted loss per share was HK$-1.78 cents, compared to earnings of HK$6.30 cents per share last year.

• Interim dividend declared at HK$0.02 per share, down from HK$0.03 per share in 2023.

• Net asset per share at HK$5.94, down from HK$6.08 at 31 December 2023.

• Unrealized gain on investments at fair value through OCI was HK$262 million, mainly from listed equities on the Tokyo Stock Exchange.

Outlook and guidance

• Anticipates improved performance in the second half of 2024, with a promising automotive order book.

• ETHOZ Group remains confident in long-term prospects despite ongoing uncertainties.

• Considering a potential separate listing of ETHOZ Group, though still in early stages.

• Cautious optimism for Singapore and Vietnam, with new product launches and COE supply recovery.

• Ongoing challenges expected from geopolitical unrest, EV market shifts, and stock market volatility.