Tat Hong   

Tat Hong Growing to a Global Player

From OCBC 7 Oct'09:    Tat Hong Holdings Ltd: On track for medium term growth          
Fair Value(F):   $1.15       
2010'(F) PE ratio: 11.979       
Profit(F):  $48,500,000.00       
EPS(F):  $0.096       
              
  PE and Price List:          
  PE: 11.979 Price:  $1.15  Upside: 0.00%
  PE: 11.88  Price:  $1.14  Upside: 0.88%
  PE: 11.77  Price:  $1.13  Upside: 1.77%
  PE: 11.67  Price:  $1.12  Upside: 2.68%
  PE: 11.56  Price:  $1.11  Upside: 3.60%
  PE: 11.46  Price:  $1.10  Upside: 4.55%
  PE: 11.35  Price:  $1.09  Upside: 5.50%
  PE: 11.25  Price:  $1.08  Upside: 6.48%
  PE: 11.15  Price:  $1.07  Upside: 7.48%
  PE: 11.04  Price:  $1.06  Upside: 8.49%
  PE: 10.94  Price:  $1.05  Upside: 9.52%
  PE: 10.83  Price:  $1.04  Upside: 10.58%
  PE: 10.73  Price:  $1.03  Upside: 11.65%

 

Actually, a more rigorous approach to reviewing the performance of a company is ROE, rather than EPS. Of course, one must note that ROE also can be distorted through the use of leverage, so one must adjust for that.

I feel that what's important with AIF and Tat Hong is the synergies which they can achieve which go far beyond what the Balance Sheet can currently quantify. There is a lot of business relationships, network, Guanxi and contacts which can be shared, and analysts are loathe to put a value to this because it is an intangible aspect of the business. Truth is, with AIF's experience and their status as a pro-Asian Private Equity Fund, this will help to extend Tat Hong's footprint in S.E.A, in the long-term.

I would caution not to expect miracles or immediate results from this partnership. It will probably only bear more fruit in 2-3 years time as Tat Hong grows its China footprint. One must be patient to witness the growth of a business. Rome was not built in a day.

Also, by reviewing the terms of the RCPS, it will become extremely onerous for Tat Hong after the 5th year. This demonstrates that they have the confidence for the business to do well enough in 5 years time, so that a substantial portion (if not all) of the RCPS will be converted mandatorily to ordinary shares. Thus the dilution to EPS is delayed, though the dilution to dividend will be immediate. But I see it as cash inflow now to build a business, increase ROE and cash flows, strengthen Balance Sheet, then return the favour back to AIF and minority shareholders.

Just my 2-cents views.

 

From OCBC

Partnering AIF Capital for growth. Tat Hong Holdings Ltd (Tat Hong)
hosted a joint analyst briefing with its new strategic shareholder AIF Capital
yesterday. Key takeaways from this briefing include: (i) Tat Hong's medium
term growth strategy, driven by its Tower Crane segment, remains on track,
(ii) AIF Capital's strategic investment will not only strengthen its balance
sheet, but also introduce new inorganic growth opportunities, and (iii) the
worst is over in terms of its operating environment. To recap, AIF Capital
recently invested S$65.0m in exchange for a 11.4% stake in Tat Hong,
coupled with a non-executive board representation. We view its strategic
investment positively as AIF Capital can leverage on its expertise and
network within Asia's infrastructure industry to bring inorganic growth
opportunities to Tat Hong. In addition, its investment signals a vote of
confidence in Tat Hong's prospects, as AIF Capital seeks long term
investments (7 years on average) in companies that are poised to benefit
from Asia's growth.


Earnings to rebound in 3Q10. Tat Hong has weathered several challenging
quarters as equipment sales plunged along with the global economic crisis,
leading us to project earnings contraction for FY10. On a positive note,
management believes that the worst is over. 3Q10 earnings are expected
to rebound as banks loosen their credit lines and customers regain
confidence. Tat Hong has been steadily increasing its focus on rental
income, which now accounts for 68.5% of gross profit, in order to stabilise
its earnings stream. This strategy will ensure the group's profitability through
ups and downs of economic cycles, and will capitalise on customers'
growing preference for equipment rental rather than outright capital
investments.


Value emerging. Upgrade to BUY. Tat Hong's shares have fallen by
20% over the last two months and we see value emerging at current levels.
Valuations are undemanding at 10.3x FY10F PER and 1.2x FY10F NTA,
coupled with a relatively decent 3.9% dividend yield. On top of that, recent
purchases by directors signal confidence in the company's prospects. We
upgrade Tat Hong to BUY and raise our fair value estimate to S$1.15 (from
S$1.13) as we rollover our valuations to a blended FY10/11F NTA (previously
FY10F) but on the same 1.3x peg. With slower earnings momentum, we
continue to favour NTA valuations to better capture Tat Hong's value. Our
earnings projections have been lowered slightly to reflect more conservative
revenue and margin assumptions. (Lee Wen Ching)

 

Just take from share investment book.

Tat Hong   NAV 0.81,  PE 8.1 ( when price around 1.13),  yield 4.5%  , EPS.137 (end 31 mar 09), EPS 1q10 .021

Tiong Woon, Nav0.514, PE 6.5 ( when price around 82cent), yield 0.5%, EPS 30 June 09 ending = 0.125

 

yes

tat hong is larger crane co than tiong woon.

but is their EPS better than tiong woon.

can some one shed some light

 

tat hong is the lau ta in this crane industry but px not moving.

look at tiong woon, cheong likes no tomorrow.

director and chairman of tat hong also cannot tahan

bought 50 lots each to support

actually what happen.???????

 

talking up the counter huh? hee....anyway this burger will remain weak for time being....seems may hit 1.05 range again :P

musicwhiz5      ( Date: 25-Sep-2009 02:45) Posted: Tan Chok Kian is the Chairman of Tat Hong, not just a Director. His buying at $1.08 demonstrates confidence in the Company. In addition to this purchase, Leong Horn Kee also purchased shares the previous day, also at $1.08. 2Q FY 2010 results should be out by mid-Nov 2009. I do not expect a dividend. derekchong      ( Date: 24-Sep-2009 19:06) Posted: another Director buy 50 lots at $1.08 today.( SGX posting)

 

Tan Chok Kian is the Chairman of Tat Hong, not just a Director. His buying at $1.08 demonstrates confidence in the Company.

In addition to this purchase, Leong Horn Kee also purchased shares the previous day, also at $1.08.

2Q FY 2010 results should be out by mid-Nov 2009. I do not expect a dividend.

derekchong      ( Date: 24-Sep-2009 19:06) Posted: another Director buy 50 lots at $1.08 today.( SGX posting)

 

another Director buy 50 lots at $1.08 today.( SGX posting)

 

>> ANNOUNCEMENT DETAILS

The details of the announcement start here ...

 

>> PART I

 

1.

Date of notice to issuer *

22-09-2009

 

2.

Name of Director *

Leong Horn Kee

 

3.	Please tick one or more appropriate box(es): *
	Notice of a Director's (including a director who is a substantial shareholder) Interest and Change in Interest. [Please complete Part II and IV]

 

 

>> PART II

 

1.

Date of change of Interest

22-09-2009

 

2.

Name of Registered Holder

Leong Horn Kee

 

3.	Circumstance(s) giving rise to the interest or change in interest	Open Market Purchase
	# Please specify details

 

4.	Information relating to shares held in the name of the Registered Holder
	No. of Shares held before the change 550,000   As a percentage of issued share capital 0.109 %   No. of Shares which are subject of this notice 50,000   As a percentage of issued share capital 0.01 %   Amount of consideration (excluding brokerage and stamp duties) per share paid or received 1.08     No. of Shares held after the change 600,000   As a percentage of issued share capital 0.12 %

 

 

>> PART III

 

1.

Date of change of [Select Option]

 

2.

The change in the percentage level

From % To %

 

3.	Circumstance(s) giving rise to the interest or change in interest	[Select Option]
	# Please specify details

 

4.

A statement of whether the change in the percentage level is the result of a transaction or a series of transactions:

 

 

>> PART IV

 

1.	Holdings of Director , including direct and deemed interest :

 

	Direct	Deemed
No. of shares held before the change	550,000	100,000
As a percentage of issued share capital	0.109 %	0.02 %
No. of shares held after the change	600,000	100,000
As a percentage of issued share capital	0.12 %	0.02 %

 

Footnotes

The above percentages were calculated based on 506,626,723 total issued shares inclusive of 1,961,000 treasury shares.

 

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