SGD New Issue Review : Tan Chong International 2.5Y

NEW ISSUE: TAN CHONG INTERNATIONAL LIMITED SGD 2.5 YR

ISSUER: Tan Chong International Limited
SERIES:   001
STATUS:  Direct, unconditional, unsubordinated and                                       unsecured
RATING: Unrated
FORMAT: Reg S, S274 & 275 of SFA, issuance off S$500 Million Medium Term Note Programme
TENOR: 2.5 years
ISSUE SIZE: TBD
REDEMPTION UPON CHANGE OF CONTROL:  At 101%, in accordance with the Programme
REDEMPTION UPON CESSATION OR SUSPENSION OF TRADING
OF THE ISSUER’S SHARES:  At par, in accordance with the Programme
REDEMPTION FOR TAXATION REASONS: Yes, in accordance with the Programme
PAYMENT:  Semi-annual, actual/365 (fixed)
DETAILS:  SGD250K/Medium Term Note Programme/Singapore  Law/CDP
LISTING:  Unlisted

Tan Chong SGD 2.5yr announced with strong IOIs from investors post successful roadshow in Singapore
Initial price guidance: high 2s

Comparable Bond :
United Engineer 4.2 2017 103.50, 2.80%

TAN CHONG INTERNATIONAL LTD
Tan Chong International Limited, through its subsidiaries, distributes motor vehicles, machinery, and heavy commercial and industrial equipment.  The Company also invests in properties and provides hire purchase financing and insurance agency services.

Its shares are dual listed in SGX and HK.

Share Price Chart

Net Profit Chart

The company just completed a tender for a majority stake in Zero Co, a Japanese used car auction house to expand business in mainland China.

Low leverage of 1.3 times (low debt levels) with an income stream growing from strength to strength, it is odd that I cannot seem to find a single analyst covering their equity.
** Note that 2013’s earnings was substantially subsidised by a non operating gain from disposal of shares.

Parent Company  Tan Chong Consolidated owns 35%
Sister company Tan Chong Motor Holdings Bhd (KLSE listed)
Tan family listed as Number 12 in Forbes Rich Malaysians List

I confess this is the first time I took a look at the company, and realised it is definitely a different league from Koh Brothers, Tiong Seng and all the Heetons and even BBB- rated Far East Horizon which recently paid 4.25% for a 3.5 year SGD paper, Golden Agri’s 4.2% 3 year paper and Croesus Reit 2.5 year at 4.6% earlier this year.

At 2.75% coupon, which is what I am guessing the coupon would be, this will probably not appear too appetising to the PB client for the fact that it is Tan Chong’s inaugural bond issue.

The 2.5 year interest rate is about 0.82% which gives us a credit premium of about 1.90% for this bond that is mighty decent for their pedigree, but, alas, for the absolute yield.

Now is anyone looking at Aspial retap today at 5.05%  at price 100 instead of Tan Chong ?

I wonder why you did not buy some Tiong Seng instead ?

Aspial’s Review  :
https://tradehaven.net/market/sgd-new-issue-review-aspial-5y-low-5/