Tan Chong falls 8.0pct before settling flat at midday
The stock touched an intraday low of 72.5 sen, retracing gains from Wednesday's close of 79 sen.
It emerged as one of the most actively traded counters, with 19.56 million shares changing hands.
The volatility followed an unusual market activity query by Bursa Malaysia yesterday, after the stock surged 44 per cent or 25.5 sen to 83.5 sen from 58 sen on Tuesday.
RHB Research said Wednesday's rally reflected a shift in market sentiment, prompting the firm to upgrade its call on the stock to "Buy" from "Sell", with a significantly higher target price of RM1.12 from 27 sen previously.
The firm said the market started to relook at Tan Chong from an underlying asset angle following an unexpected land sale on July 10.
Tan Chong sold 1.30 hectares along Jalan Putra for RM148.8 million following the first land sale to Avaland Bhd in Petaling Jaya earlier this month for RM49 million.
The total gain on disposal for these lands is expected to be between RM15 million and RM18 million with both deals transacted between RM518 per square feet and RM1,067 per sq ft.
RHB Research said Tan Chong owns around 5.67-hectare non-manufacturing land - including showrooms, storage and service centres - across Selangor, Kuala Lumpur and Johor, based on its latest annual report.
"Assuming market values of RM250-RM1,050 per sq ft, we estimate these lands could be worth RM220 million, roughly 40 per cent of Tan Chong Motor's market capitalisation.
"More importantly, the group does not disclose its exhaustive list of assets.
"Hence, there may be other smaller properties that might not be used for its automotive business but are suitable for redevelopment, such as the recent land disposal was not included in the Top 10 largest properties, implying more assets to be potentially realised," the firm added.
RHB Research said Tan Chong still retains its traditional automotive model of owing the distribution network, which includes showrooms/properties vis-à-vis the current agency distribution model.
The firm said there may be incentives for Tan Chong to resize its business model by selling some of their showrooms as Nissan's market share has fallen from six per cent of TIV in 2010 to one per cent in 2024.
The group operates around 50-60 branches, of which 20-30 per cent are based in Kuala Lumpur.
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