TAT HONG - A risk worth taking...

divads
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10 years 7 months ago #16183 by divads

TAT HONG - A risk worth taking... was created by divads

Tat Hong has been bashed down due to one quarter of bad results. This is not the first time Tat Hong having bad quarters. In Feb 2011, also bad quarter but eventually results return to normal and so did the share price.

Is always a better choice to buy when everyone else is selling than buying when everyone is buying.

I forsee their results will return to normal based on

1) Management taking pro-active steps to remedy the drop in profit
- Shifting some operations to Johor

2) A one time gain from disposal of a piece of land at 11 Jul Ave.

3) The company bought 2 land parcel in Iskandar Malaysia, may see capital appreciation later

4) Australia new PM Abbott has promised to spend billions in infrastructure which will benefit Tat Hong

5) China economy is getting better

6) Venturing into Myanmar , which is a growth monster

As and when results return to normal level, share price will go back to $1.20 easily.

Anyway there is a article that is positive on Tat Hong. www.vertikal.net/en/news/story/18102/

Quote: Vertikal Comment

While the numbers do not look great for the quarter, a good deal of this is timing related, although Australia is a significant part of the business and with the Chinese economy slowing, Australia is likely to be affected.
Tat Hong has very good geographic spread across Asia and will almost certainly benefit from buoyancy in other parts of the region and is likely to meet its full year forecasts in spite of the slow start.

Of course there are a few analyst which issue sell recommendation due to the one bad quarter. Maybank and one other I cant remember.

I think overall is a risk worth to take to buy Tat Hong under 90 cents..

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Diversity
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10 years 7 months ago - 10 years 7 months ago #16184 by Diversity

Replied by Diversity on topic TAT HONG - A risk worth taking...

Tat Hong's crawler crane rental segment performed poorly in 1Q of FY14. The company's results announcement indicated that lower rental revenue was partly due to:

(1) "the relocation of cranes [from elsewhere in Austrialia] to Darwin for a phasing in to the Ichthys LNG project"; and

(2) "the time lag in redeploying cranes to Ichthys EPC project following the completion of the flood barricade project [in Thailand] in FY13".

Were the relocation and redeployment on massive scales resulting in utilisation rate plunging to 65% in 1Q FY14 from 74% of prior year?

Tat Hong has been enlarging its rental fleets. Crawler cranes now number 677 (compared with 553 in Mar 2011); and tower cranes 849 (compared with 684 in Mar 2011). Fleets are also being modernised with purchases of larger new cranes and sales of smaller used units.

Entry barriers to crane rental business are high. Huge capital outlay is needed to build up the fleet. Large parking space is also needed for off-hired cranes.
In an earlier interview, Tat Hong CEO said that Tat Hong used to buy and resell cranes only. Crane rental market was small then.

Tat Hong was nearly wiped out during the Asian financial crisis, when contractors had no cash to buy cranes. Contractors who had survived the crisis were then renting cranes instead.

Tat Hong therefore decided to enter the rental market. It has been disciplined enough, refraining from buying when prices are high, and mopping up used cranes during bad times. In the crawler crane rental business, Tat Hong is the largest in Singapore and second largest in Australia. Tat Hong believes that its tower crane fleet is the second largest in China.

As for parking space, which is expensive especially in Singapore, Tat Hong is going to put half of its cranes in Iskandar to offload some properties in Singapore.

Tat Hong 1Q poor showing was also partly due to "losses sustained in PT Worldwide Equipment, a company based in Batam, Indonesia, which provides steel fabrication service, overhaul and maintenance services for marine machinery, offshore lifting services as well as the supply of marine equipment".

In the interview, published in The Edge (17 June 2013), CEO was ebullient about PT Worldwide: "the company cranes could be fixed to barges at the [PT Worldwide's] yard for use in offshore engineering activities. These so-called ringer cranes are used to lift modules of rigs onto the barges, which are then towed out to work sites at sea. Tat Hong also plans to use the Batam facility to park equipment used in the construction of jetties in the region.".

Those who read the Edge article are understandably upset with the poor 1Q showing released two months later.

There are reasons to believe that Tat Hong, with its track record and recent capacity building, will be back again.

Last edit: 10 years 7 months ago by Diversity.

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Val
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10 years 7 months ago #16194 by Val

Replied by Val on topic TAT HONG - A risk worth taking...

Yes, stock price kena hammered already for poor showing in 1Q profit.

Net profit was $8 m. Would have been worse if not for a $4 m gain on disposal of asset. And luckily the forex loss was $4.4 m only instead of $6.6 m in 1Q of the previous FY.

The barriers to entry in this business are anything but high. Lots of small businesses offer cranes, etc for rent.
Tat Hong has economies of scale but at the expense of being in a net debt position. Their short-term and long-term debt = $500 million.

Finance costs was $5.8 m in 1Q......

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divads
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10 years 7 months ago - 10 years 7 months ago #16195 by divads

Replied by divads on topic TAT HONG - A risk worth taking...

yap.. there are risks associated with Tat Hong . High debt cos of expansion, so I think and I hope they will do a placement or rights to address that. They are slowing down their expansion in the hope of reducing the gearing.

I dun mind they do another placement, best place it to "well known" figures like popiah king etc..

Nowadays whenever there is a "halt" and if it is a placement, share price chiong to the sky like Tritech, See Hup Seng etc...

It has a NTA of $1 > share price, so I hope is a supporting factor.

Time will tell if I make the correct decision to be vested in Tat Hong

Last edit: 10 years 7 months ago by divads.

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Val
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10 years 7 months ago - 10 years 7 months ago #16196 by Val

Replied by Val on topic TAT HONG - A risk worth taking...

If the price drops to 85 cents, I will buy a small stake. Buy cheaper than the insiders. !!!

The day after results announcement 4 weeks ago, the controlling shareholder CHWEE CHENG & SONS PTE LTD bought at 92.88 cents 3,228,000 shares. Several other insiders subsequently also bought small quantities.

Last edit: 10 years 7 months ago by Val.

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divads
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10 years 7 months ago #16197 by divads

Replied by divads on topic TAT HONG - A risk worth taking...

hahaha.. ok .. gd luck ...

the next quarter results crucial . But if u see the share goes up, it means most likely the next quarter returning to normal.. If u see shares crash, means most likely the next quarter gone case. Usually some ppl will know something we dun know

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