Tuesday, July 9, 2013

Tat Hong : Fear not, for it is not apocalypse (CIMB)

Tat Hong Holdings
Current S$1.19
Target S$1.75
Fear not, for it is not apocalypse

 TAT’s recent share-price weakness is reminiscent of its mid-Apr fall. But this time around, we believe sentiment is the cause. Its crane-rental division is still strong in all key markets, though there is some translation impact from its Australia-barricaded distribution division.

We conservatively lower our FY14-16EPS by 2-4% for lower Australian contributions from A$ weakness. Accordingly, we lower our target price, still at11x CY14 P/E (its 5-year average forward P/E). Reiterate Outperform with strong Asian operations still its main catalyst while potential M&As could provide icing on the cake.

What Happened
The broader market has pulled back from its May high and TAT has not been spared, retreating20% in the last one month. As there have been no operational hiccups at the company, market sentiment and the overhang from AIF’s voluntary conversion could be the culprits, in our opinion.

What We Think
The slight negative aspect of its operations, if any, is currency-related via translation effects. Yet, we believe the dent on FY14-15 numbers will only be 2.5-4%,at the most, after speaking with management. This is not surprising, as in recent quarters, higher revenue contributions had been flowing in from Singapore and other ASEAN markets, at the expense of Australia. Contributions from Australia have been generally affected by weaker demand in the mining sector this year. We are sticking to our view that near-term earnings will increasingly be spurred by Singapore and other ASEAN markets (Thomson Line construction in Singapore in 2H13, rail projects in Malaysia and Thailand) and Hong Kong.

What You Should Do
We continue to believe that the group can achieve our forecasts for the next few years. Even without massive capex outlays, organic growth should be good, in our view, with efficient capital usage. The last four quarters had marked the start of a potential 3-year boom, in all probability. Accretive M&As could provide icing on the cake, further catapulting TAT’s growth.

Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 08/07/13

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)

乔治·索罗斯(George Soros)



高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo

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