Tat Hong

[Musicwhiz]

I am more inclined to think that the flood situation is bad, rather than good. This is because the industries will be closed for quite a while (coal and others affected) and Tutt Bryant may have problems deploying their assets for use. Existing assets may also lie idle for quite a while, impacting revenues/earnings.

I've personally emailed the IR a few days ago and the reply was that most of the machinery had been shifted to higher ground and so was not adversely affected by the flood. Hence, there was no direct damage and I do not forsee that equipment has to be written off or written down.

For business prospects, I guess we will have to wait till 3Q 2011 results are released to get a clearer picture.

[kampungboy]

Tat Hong Holdings: Aussie floods a double-edged sword

Summary: Tat Hong Holdings (Tat Hong) has announced that its Australian operations have been affected by the recent floods in Queensland, resulting in the evacuation of one of its branches.

Fortunately, part of its equipment inventory had earlier been transferred to higher ground, thereby reducing the extent of damage to its assets.

While Tat Hong should be able to claim insurance against part of the damages resulting from these floods, we believe that impairment risks remain. Near term adversities that may arise include a temporary reduction in deployable fleet, impairment charges, and potential project disruptions, which may weigh on Tat Hong’s FY11-FY12 earnings.

Nevertheless, damages should be contained given that less than 5% of the group’s cranes are located in the affected area. In addition, the group stands to benefit from massive reconstruction demand in the aftermath of Australia’s floods.

We are keeping our estimates intact as it remains premature to ascertain the financial impact of damages resulting from Australia’s floods. Maintain HOLD with S$0.99 fair value estimate. (OCBC - Lee Wen Ching)

Stuckist

[Aspellian]

Thanks MusicWhiz for your views. Do agree that business will be affected near term but mid-term wise could be quite interesting as Australia need to rebuild and Tat Hong may have opportunities beyond their normal bread and butter craning customers.

Kampungboy - "stuckist" - what an interesting term. haha! you made my day!

[iam802]

2011Jan-Tat Hong-800x600.png

[Musicwhiz]

Dear all, I have detailed my reasons and rationale for divestment in Tat Hong on my blog. Please feel free to visit and leave comments, thanks!

A snippet as follows:-

"Note that in the first place, the crane industry is very fragmented; and that even though Tat Hong is one of the major players, there are still many smaller companies that can buy a few cranes and then lease them out, so this makes it a very price-competitive environment. The fact that Tat Hong is succumbing to keen competition signals that this is a permanent problem which is likely to persist, as competition does not just disappear overnight. It is one of the most difficult problems for a company to tackle, and if they did not have a very strong competitive moat in the first place, the first signs of weakness will show up in the gross margins, as what Tat Hong is demonstrating."

[Poles]

Dear MW,

don't you think this is a time to buy more....

[Musicwhiz]

Dear MW,

don't you think this is a time to buy more....

Hi Poles,

I have stated my reasons for the decision to divest.

Perhaps you can comment on why you think it is time to buy more?

[Musicwhiz]

Business Times - 27 May 2011

Tat Hong Q4 profit plunges 61% on margins

By FELDA CHAY

CRANE company Tat Hong Holdings saw a 61 per cent fall in net profit for its fourth quarter from a year ago on lower margins for most of its divisions.

Earnings for the three months ended March 31 fell to $3.8 million from $9.8 million a year ago.

In turn, earnings per share fell to 0.67 cent from 1.72 cents. The drop comes despite a jump in sales, which rose 17 per cent to $152.7 million.

Tat Hong said it expects margins to remain tight in view of increasing competition from overseas players who are attracted to the region - which has a strong pipeline of infrastructure and oil and gas projects.

Still, 'barring any unforeseen circumstances or major setbacks impacting the improving regional market outlook, the group expects to remain profitable in FY2012', said the company.

For the full-year, net profit fell 33 per cent to $26 million, bringing earnings per share to 4.56 cents. Last year, earnings per share were 7.2 cents.

Revenue climbed 18 per cent to $584.2 million.

As at March 31, Tat Hong held cash and cash equivalents of $54 million, compared to $69 million a year ago. Net asset value per share was 91 cents, compared with 88 cents last year. The company has proposed a final dividend of 0.5 cent per share, down from 1.5 cents last year. Yesterday, Tat Hong's shares fell 1.5 cents to 84 cents.

(Not Vested)

--------------------------------------------------------------------------------

[stilicon]

results FY12: http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_DBC23742327887D948257A0C002FD8B3/$file/Announcement-TatHong-SGXNET-March2012.pdf?openelement

- revenue : +23%
- net income + 23%

[winston]

Tat Hong Holdings: Have Cranes, Will Fly. Initiate Buy with TP SGD1.41
Mkt Cap USD387m
ADTV USD0.3m

As Tat Hong’s rental business, which enjoys more stable demand, begins to make up a bigger chunk of its total gross profit, earnings volatility should ease in tandem.

Tat Hong stands to benefit from regional infrastructure boom in the medium term. Over the past four quarters, Tat Hong’s key operating
statistics have shown significant improvement. The trend looks set to continue for the next 2-3 years, buoyed by high demand in the region.

Initiate coverage on Tat Hong with a BUY recommendation and target price of SGD1.41, pegged at 14x FY3/13F PER.


Source: Kim Eng