Escolar Documentos
Profissional Documentos
Cultura Documentos
HOLD (Downgraded)
16 Nov 2010
FY2011 Q2 results disappoint. Tat Hongs FY11Q2 performance came in slightly below our expectations at NPAT of SGD7.9m on SGD145.6m revenue. On a QoQ basis, the figures represented a 42.2% and 2.2% fall respectively. This is not what we expect from a company coming out of the tunnel and into the light. Then again, we have observed that such disappointments appear to be the norm rather than the exception across their industry peers in this quarter. Crane rental the only rose among thorns. Revenue for all segments, except Crane Rental, fell from the previous quarter. As the only segment that bucked the downtrend, Crane rental saw a 18.2% increase in revenue over Q1 to SGD52.7m. Management stated that rental rates and demand for cranes (especially the smaller ones below 250MT) are slowly improving. On another note, we are rather surprised by the 18.4% QoQ fall in revenue to SGD13.8m for the Tower Crane segment. Since it represents Tat Hongs foray into China, the worlds main growth engine, we would be looking out for a rebound in the remaining 2 quarters of FY11. Competition in Heavy Lift. Tutt Bryant (TBG) announced in Feb a 50:50 JV with Fagioli SpA, an Italian heavy lift and haulage specialist, to undertake heavy lift projects. This plan appears to be hampered by stiff competition from European players who are forced to venture into Asia Pacific due to the economic slowdown in their home region. Interim dividend declared. The Company announced an interim dividend of 1 SG cent for the half-year. FV lowered to S$0.94 and downgrade to Hold. In our Update Note for FY10Q4, we upgraded our recommendation for Tat Hong to Accumulate as we expected the Company to be seeing the light at the end of the tunnel. It seems now that the tunnel is longer than we expected. While we lower our revenue and profit forecasts for FY11-13, their acquisition of the remaining ~30% stake in TBG helped to make up for the difference at the net profits attributable to shareholders level. Our earnings model arrived at a slightly lower FV of S$0.94. However, since their share price has moved ahead to close at S$1.02, we downgrade our recommendation to Hold.
2009 631,761 163,119 76,685 -1.3% -24.5% 13.62 14.9% 25.8% 11,294 2010 495,356 118,115 45,532 -21.6% -40.6% 7.20 6.5% 23.8% (46,403) 2011F 597,819 137,440 42,071 20.7% -7.6% 6.50 5.4% 23.0% (65,331) 2012F 644,214 173,389 61,040 7.8% 45.1% 9.43 7.5% 26.9% 4,661 2013F 694,681 191,079 66,046 7.8% 8.2% 10.20 7.8% 27.5% 24,266
Our Recommendation
0.94
0.98 1.02 12 months
Company & Stock Data Market cap (SGD Mil) 12-mth trailing P/E Price-to-book 12-mth Dividend yield 52-wk high 52-wk low 30D average volume 30D average value Free float Beta 506.6 14.9x 1.1x 2.5% 1.11 0.85 306K 321K 33.1% 0.98
Source: Bloomberg
Source: Bloomberg
Revenue EBITDA Net Profit Rev Growth Net Profit Growth EPS (SGD cts) ROE EBITDA Margin Free Cashflow
644,214 399,413 244,801 1,619 10,307 256,727 160,453 96,275 (19,181) 3,221 80,315 19,276 61,040 7,325 53,715 173,389 4,661 9.43
BALANCE SHEET
In SGD '000 Cash & cash equivalents Trade and Other Rec Inventory Property, plant & equip (net) Other Assets Total Assets Trade Payables Borrowings Other Liabilities Preferred Stock Common Equity Total Liabilities and Equity 461,892 886,434 Adjusted 31-Mar-09 46,280 97,725 217,686 385,741 139,002 886,434 89,032 266,822 68,688 593,343 1,040,805 Adjusted 31-Mar-10 76,647 112,715 200,997 520,335 130,111 1,040,805 68,021 298,415 81,026 Forecast 31-Mar-11 77,716 128,394 249,555 582,592 128,186 1,166,444 94,992 317,044 73,852 65,000 615,557 1,166,444 Forecast 31-Mar-12 83,748 128,960 256,399 629,101 128,186 1,226,394 90,763 344,354 78,491 65,000 647,785 1,226,394 Forecast 31-Mar-13 90,308 138,111 256,801 669,713 128,186 1,283,120 96,315 355,610 83,538 65,000 682,658 1,283,120
Page 2
80,315 77,114
FINANCIAL RATIOS Profitability Gross Profit Margin EBITDA Margin Pre-tax Income to Op Rev Ratio Net Profit Margin ROE ROA Growth (Y-o-Y) Revenue EBITDA Pre-tax Income Net Income Financial Structure Networth Ratio Debt-to-equity Ratio Operational Efficiency Acc Rec T/O (days) Acc Payable T/O (days) Inv T/O (days) Cash Conversion Cycle (days)
52.1% 57.8%
57.0% 50.3%
58.3% 46.6%
58.1% 48.3%
58.3% 47.6%
43 83 203 164
59 82 241 219
55 92 242 205
50 83 234 201
50 82 218 186
Page 3
This report is prepared by AmFraser Securities Pte Ltd (AmFraser), which is a holder of a capital markets services licence and an exempt financial adviser in Singapore. This report is provided for information only and is not an offer or a solicitation to deal in securities or to enter into any legal relations, nor an advice or a recommendation with respect to such securities. This report is prepared for general circulation. It does not have regard to the specific investment objectives, financial situation and the particular needs of any recipient hereof. You should independently evaluate particular investments and consult an independent financial adviser before dealing in any securities mentioned in this report. This report may not be published, circulated, reproduced or distributed in whole or in part to any other person without our written consent. This report is not intended for distribution, publication to or use by any person in any jurisdiction outside (i) Singapore or (ii) such other jurisdiction as AmFraser may determine in its absolute discretion, where its distribution, publication or use would be contrary to applicable law or would subject AmFraser and its related corporations, connected persons, associated persons and/or affiliates (collectively AmFraser) to any registration, licensing or other requirements within such jurisdiction. The information or views in the report (Information) has been obtained or derived from sources believed by AmFraser to be reliable. However, AmFraser makes no representation as to the accuracy or completeness of such sources or the Information and AmFraser accepts no liability whatsoever for any loss or damage arising from the use of or reliance on the Information. AmFraser may have issued other reports expressing views different from the Information and all views expressed in all reports of AmFraser are subject to change without notice. AmFraser reserves the right to act upon or use the Information at any time, including before its publication herein. AmFraser and its directors, officers, employees and representatives may, to the extent permitted by law, transact with, perform broking, underwriting or other services for or solicit business from, the issuer(s) or other persons in respect of, and/or have a position or holding, or other material interest, or effect transactions in, the securities referred to in this report or other investments related thereto. Copyright 2010 AmFraser Securities Pte Ltd. All rights reserved. Republication or redistribution of AmFraser Securities Pte Ltd content is expressly prohibited without the prior written consent of AmFraser Securities Pte Ltd. AmFraser Securities Pte Ltd shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
Page 4