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| SINGAPORE (Thomson Financial) - Shares of Singapore crane leasing company Tat
Hong Holdings Ltd soared to an all-time high Tuesday in light of strong equipment demand with heavy infrastructure spending in the region. At the end of the morning session, Tat Hong was up 11 cents or 3.7 percent at 3.06 Singapore dollars, off a record 3.08 dollars, with 797,000 shares traded. "Our recent discussions with management suggest that the industry has moved further in its favor, with customers focusing largely on crane availability and not on pricing," Citigroup said in a client note. "The shortage of heavy equipment and robust demand has allowed the group to post an average of more than 20 percent rental rate increase (some large units as high as 50 percent more), it said. The brokerage has increased its earnings estimates for the company by 11-22 percent for the years to March 2008-2010. Citigroup has a "buy" rating on Tat Hong, raising its target price for the company to 3.70 dollars a share from 2.80 dollars Tat Hong's share price has also been running up on news that its 23 percent-owned unit, Sunfield Investments Pte Ltd, is planning a 124-million-Singapore dollar initial public offering. Sunfield's associate company Fushun Yongmao Construction Machinery Co Ltd manufactures and sells cranes in China. (1 US dollar = 1.45 Singapore dollars) yuinmunn.szetoh@thomson.com MMMM |
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Tat Hong rose as much as 7.6% to a record high of $2.97 after the firm said it will list its unit Sunfield Investments, dealers said.
"Every time a company lists a subsidary, it unlocks value in the parent company. There may be a book value gain as well as one-time exceptional gains," said a local dealer.
Tat Hong said in a statement that it will list Sunfield Investments, which has an associated company in China that makes tower cranes, on SGX, and has appointed CIMB-GK Securities as its issue manager for its IPO.
Goldman Sachs has raised its 12-month target price for Tat Hong to $2.85 from $2.60 and maintained a "buy" recommendation for the stock, citing earnings upside from a rise in crane rental rates.
"We are positively surprised by the magnitude/speed of how the crane rental rates have climbed over the last few months and see upside risk to our earnings," Goldman analyst Yoke Fong Chee said in a client note on Mon.
Now Goldman Sach targets $2.21!!!!!!!!!!! SURE CHEONG!!!!!!!!!
Buy
Core Australian market holding well; growth thesis intact
What's changed
Following a conference call with management of Tutt Bryant (Tat Hong?s
listed Australian subsidiary) on their FY2007 results, we stay positive on
Tat Hong?s core market Australia (which contributes 60% to Tat Hong?s
FY2007E revenue). Key takeaways are (1) in addition to the encouraging
2HFY07 performance from its distribution and crane rental businesses,
partial contribution of A$0.5mn from earnings accretive acquisitions
(mainly from North Sheridan) lifted full year results; (2) while the lackluster
construction activities in NSW continue to drag its general hire and other
operations earnings, an improvement in performance is expected with the
restructuring and re-deployment of assets within Kingston Industries and
the disposal of loss-making civil construction activities in April 07; (3)
strategic acquisitions, albeit of a smaller scale, in crane and general hire
should continue to drive growth going forward.
Implications
We maintain a Buy rating on Tat Hong as the positive outlook for Tutt
Bryant confirms our view that its core Australian market will continue to
provide a resilient, steady earnings base, bolstering growth in other
markets namely Singapore in the near term, and China and Middle East in
the long term. Key catalysts for the shares, in our view, would be strong
interim results showing evidence of the strength of the regional heavy
construction cycle and the company?s higher pricing power, and
acquisition announcements in Australia and China.
Valuation
We maintain our 12-month target price of S$2.21 based on DCF
methodology, using a WACC of 7.8% and terminal growth rate of 3%.
Key risks
(1) Hard landing of China and other BRIC economies which could cause a
collapse of the infrastructure and oil and gas boom; (2) weaker-thanexpected
demand of end markets; (3) expensive acquisitions.
CIMB targets $2.87!!!!!!!!!!!CHEONG AH!!!!!!!!!!!
With upcoming multi-billion infrastructure projects in the Middle East and Asia, business visibility has never been this good for Tat Hong. Equipment shortage has also allowed the company to command higher rentals and prices on equipment sales. We have reviewed our forecasts for FY08-09 and increased them by 37-52%. We also introduced FY10 numbers. We believe that Tat Hong will continue to exceed its long-term net profit CAGR target of 25%. Our new target price of S$2.87 (previously S$1.49) represents 18.0x CY09 P/E, or a PEG of 0.65x. We believe this is reasonable given its FY03-07 CAGR of 55.1% and projected FY07-10 CAGR of 29.3%.
Supply of new heavy equipments and cranes are constrained due to raw materials shortage. And demand for cranes has gone up due to the construction boom in this region (PRC, India, Vietnam etc). Rental fees for cranes and heavy equipments have also gone up ( rental for a 100-toner crawler crane is now S$18,000/mth). TatHong has about 500 units of crawler cranes and is looking at the Chinese's market for larger cranes.
Take a time out and go figure out TatHong's earning and decide whether it is still under value. Cheers!
BTW, Tiong Woon is just entering the Crawler Crane business.Therefore at a very much higher cost than TatHong in acquiring the machineries which TH bought years ago for their rental business.Therefore cost of business is very much lower.
latest news according to THE EDGE:
Tat Hong Holdings - Supply 30 crawler cranes for IR Site.
Tiong Woon Corp - Nothing at Marina Bay yet.
Generally low and inconsistent volumes so TA may not be accurate. But TA charts like Acc/Dist and Chaikin look slightly bullish now.
Very promising, miss the boat when it was below $1.
looking forward to cheong more.
vested in this stock at 1.84..
huat ah!
Singapore's Tat Hong target price raised to 2.30 sgd - JPMorgan
JPMorgan said it has raised its target price for Tat Hong Holdings to 2.30 sgd per share from 2.0 sgd on the back of the company's better-than-expected results for the year to March.
"Our price target translates to 18 times 2008 price earnings (PE) and 15 times 2009 PE and implies 15 pct upside from the current level," JPMorgan said recently in a client note.
"We believe this premium to its peers is justified given its higher ROE and industry-leading earnings growth," the brokerage said.
JPMorgan said Tat Hong, a crane leasing company, is expected to benefit from a turnaround in the construction industry here, with demand in 2007 estimated to be worth 17-19 bln sgd.
"This bodes well for Tat Hong's crane and spare parts equipment business in Singapore, and the company stands to benefit from the influx of mega infrastructure projects from around the region," JPMorgan said.
Tiong Woon (TW) belongs to the Transport Sector and Tat Hong(TH) is Wholesale. Very different. Market Capitalization : TW = S$106.3m. TH = S$537.9m. Total Shareholders return for 1 year : TW = 48% TH = 82.9%. TH is ranked 1st in the world for having the most crawler cranes. How many does TW have? maybe 20 units....!
Ya the sh px of TW is definitely cheaper than TH in term of number but......... it is definitely not cheaper in term of valuation! Cheers!
read the earnings carefully my friend and then decide if Tat Hong is expensive or not.
cannot compare Tat Hong with Tiong Woon lah. Tiong Woon has just entered the crane market
after seeing the boom in construction sector.
Tat Hong is the big daddy in this sector.
Earnings per share has doubled from 9 cents to 17 cents.
so if P/E before earnings at $2 is around 20, shouldnt the market think that P/E of around 9 for
Tat Hong is too cheap.
chiong up ahh all the way past $2.
Tat Hong seems to be quite expensive at the moment. For a relatively cheaper counter which also provides cranes services is Tiong Woon Corp. It is still below the $1 mark :)
Tat Hong reported a record high net profit of $79m and a final dividend of 3c/sh. Cheers!
forget all the Research analysts buy or sell ratings.
look at the economic figures and see how sentiment drives a counter up.
y'days GDP figures showed construction sector main reason why Spore GDP will do well.
so whose the lion in the pack in construction sector.
none other than yours truly Tat Hong, u cannot have construction without cranes can u?
counter shot up by 20 cents today.
Full yr earnings date 29th May, so contra players can still consider but you have to be alert
look at the economic figures and see how sentiment drives a counter up.
y'days GDP figures showed construction sector main reason why Spore GDP will do well.
so whose the lion in the pack in construction sector.
none other than yours truly Tat Hong, u cannot have construction without cranes can u?
counter shot up by 20 cents today.
Full yr earnings date 29th May, so contra players can still consider but you have to be alert
It fell after OCBC cut its rating to a "sell" from "buy", saying the stock is now expensive compared to its Australian unit Tutt Bryant Group
Tat Hong now trades at 20.2x its forward earnings, while crane hire company Tutt Bryant, in which Tat Hong owns 70% of, trades at 13.1x, according to Reuters data.
"Don't overload the cranes; Tat Hong's share price valuation has now run ahead of its strong fundamentals," said OCBC research analyst Chong Wee Lee.
Tat Hong recently placed out 30 million new shares at $1.46 each, with an option to place a further 10 million shares depending on demand. The placement price represents a discount of about 9.9% to weighted average price of shares traded on 10 April. The stock closed at $1.64 on 10 April.
Tat Hong has announced a strong set of 3Q results. Share price has surged and is on uptrend because of this. The co has declared interim dividend of 5.5 cts. Fundamentals are good and one may want to keep for medium term because of the IR projects if one does not wish to take profits now.
http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_EF4FAC22A59BB07E48257280002EDDA9/$file/3QFY2007NR120207.pdf?openelement
Didnt monitor this stock for a while and noticed that the price has gapped up after surpassing 1.25 resistance on the 10th of Jan. Looks like it has been ranging during the short term with physiological support at 1.285 and resistance at 1.37.
Today ended at 1.28. Which the is lower then yesterday's low and it's high lower then yesterday as well.
For momentum trade at the support and resistance mentioned above, this may be a good entry point however momentum indicator indicates room for further downtrend price action.
I will stay side lined for now.