KUALA LUMPUR: RHB Research has maintained its "sell" call on Tan Chong Motor Holdings Bhd despite an ongoing recovery in the auto market as it remains relatively concerned over the stiff competition in the domestic market environment.

       While Tan Chong's management expects momentum to continue into 1HFY22 following the normalisation of sales and production in 4QFY21, RHB remains cautious over the domestic market outlook.

       It said this was owing to the attractive vehicle models available from competitors in the mass market segment.

       In a report, the research firm said it anticipates that Tan Chong will launch the Nissan Kicks, Nissan X-Trail

       and Serena in 2022.

       However, these models will come into competition from the Honda City, Honda City Hatchback, Toyota Vios, Toyota Yaris and Proton X50 in the RM80,000 to RM100,000 price segment.

       Nevertheless, Tan Chong's Malaysia operations is expected to leverage the extended sales and service tax exemption measures until mid-2022.

       Meanwhile, Tan Chong's foreign markets also experienced a recovery in sales in 4QFY21, with normalisation expected to continue in the coming quarters.

       "Previously, management mentioned that they are exploring opportunities with third parties for the potential utilization of its Danang plant, of which we can only expect a conclusion towards end-2022/early 2023," said RHB.

       The research firm maintained its target price at RM1 with an unchanged 10 times price-earnings tagged to FY23 earnings.