Tat Hong Holdings Limited

[vingaard]

I'm still holding on to one lot bought at a high price of $2.66, serves as a reminder of my investing mistakes. Lol

[TheMillennium]

Would like to find out more abt Tat Hong and their warrants.

From SGX:
EXPIRY OF WARRANTS ON
2 AUGUST2013
AT 5.00 P.M.
Warrantholders are reminded that in accordance with the terms and conditions of the Warrants, the rights to
subscribe for new ordinary shares (the"New Shares") in the capital of the Company will expire at 5.00 p.m.on2 August2013, after which time, any rights comprised in the Warrants which have not been exercised will lapse and the Warrants will cease to be valid for any purpose whatsoever.
EXERCISE PRICE
The exercise price of the Warrants is S$2.50 for each new share.

The warrant means that you can buy the company shares at $2.50 whereas currently Tat Hong is trading at $1.185?

Also, how do I find out how many new shares will be "created" thru this warrant? This will surely cause a significant dilution in all aspects of the company?

[AlphaQuant]

Would like to find out more abt Tat Hong and their warrants.

Also, how do I find out how many new shares will be "created" thru this warrant? This will surely cause a significant dilution in all aspects of the company?

50.6mio outstanding warrants on 1-1 conversion basis. Info can be found on sgx. Look for the warrant in the url and click on the name for info.

http://www.sgx.com/wps/portal/sgxweb/hom...y_warrants

i doubt anyone will want to exercise given strike>spot, hence no dilution.

[GreedandFear]

AGM notes :
DISTRIBUTION
1. Even though Australian distribution segment has been hurt by economic slowdown, "margins are still 20%"
2. Indonesia distribution sales have grown a lot but mainly through excavator sales to coal mines. Excavator sales have lower profit margins which a part of reason why distribution division's margins are declining.

CHINA
1. Will continue to focus on Tower Crane Rentals. No interest in starting to rent crawler cranes etc. Market for Tower Crane Rentals is huge and they have only scratched the surface, so why try to go after another segment ?
2. Estimate 300,000 tower cranes in China. No 1 rental player has 1,600. TH is No 2 with 800.
3. TH is only focused on infrastructure projects (not real estate). Don't see any signs of slow down. Local management would like more cranes.
4. Tightening by China banks on lending should hurt local crane rental cos but TH has no problems financing so hope to gain mkt share
5. Quite bullish on China. Especially with rising utilisation rates (helps margins).

LAND
1. Singapore land leases are starting to become short (ie leases closer to expiry). Some as short as 5 years.
2. Looking to relocate more to Malaysia.
3. 2 years ago bought 25 acres of land in Iskandar ar MYR 32 a square foot (25 x 43,560 = 1,089,000x 32 = MYR 34.848 /2.54 = S$13.71MM). Currently going price is MYR 72 a square foot. Despite purchasing two years ago, Tat Hong ("TH") will only take possession next month.
4. Managed to secure a 5 (??) acre lease of land from JTC. Will also try to consolidate some of Singapore ops into this piece.
5. Expect to sell some Singapore land. Implication seeming to be that there would be gains coming from this.
6. Bought land in Australia to again consolidate operations
7. All of these moves (Singapore, Australia, Malaysia) will cause TH to incur costs and will take up management time (implying that the gains in 5 above will compensate for some of the inevitable business interruption).

SEA (incl. HK)
1. Expect crane rental biz to continue to grow given many infrastructure projects.
2. Singapore distribution has become more cut throat with some competitor (Sin Heng Heavy mentioned) selling with margins as low as 5%. At those levels, TH prefers to rent cranes out.
3. Have some issues with their new offshore oil and gas focused business in Batam. Unclear what.

AUSTRALIA
1. Big infrastructure projects typically rent cranes for 2-3 years
2. Very large Darwin project (bigger than Gorgon sp?). TH moved cranes in anticipation but project has been slow to start. Will impact revs.
3. Still happy with the crane rental biz but distribution is hurting. Australian consumer is hesitant to spend and coal mining has slowed down.
4. TH's CEO's son has been appointed of Australian biz. Chairman commented that Board had set up a special committee to vet him and he was found suitable. Prior manager retired but is still an advisor.
5. They think they are No2 in Australia crane rentals
6. About half of the Crane Rental division' sales come from Australia.

HK
1. For some reason included in SEA (seems to be because some of the cranes are owned out of Singapore).
2. 80 cranes
3. HK revs were $20MM

ASSOCIATES
1. Yonma is a "sister company". Helped them to get listed on SGX.
2. Very reputable Chinese tower crane manufacturer that is able to export to the US (ie testament to their quality).
3. All of TH's China cranes are purchased from Yonma.
4. Recently restructured their China subsidiaries under a new holding company. Some of those subs are partially owned by Yonma. After restructuring Yonma owns a stake in the China holdco. "cleaner".
5. Kian Ho Bearings was a mistake. Thought there were synergies with TH's spare parts business but didn't work out. Passive investment at this stage

CONCLUSIONS
1. TH wants to focus on the rental biz.
2. 2013 is seen as a year of consolidation and restructuring (The CEO repeatedly used the word "consolidation").
3. FX volatility and Australia economy pose challenges but CEO us still reasonably optimistic.
4. Increase in accounts receivables due to China (no more details). Need to work on this.
5. Expect reduced capex.

MY TAKE.
Sounds like there is enough growth in China and SEA crane rentals (and Australia crane rentals appears to be stable or will only dip a bit); to compensate for slower performance in distribution business. I would expect flattish to down 10% profit performance for 2013 (although weaker AUD will hurt them). NAV is $1.09 and price is 1.18 (goodwill is small and cranes have a long life so NAV is probably real) and a PE of 10x with a dividend of about 3.5%. I still like this company but share price upside is probably for the medium term as I don't see an immediate catalyst.

Vested.

[portuser]

Greedandfear

Thank you for the highlights of Tat Hong AGM.

You have stated that Yongmao is a "(v)ery reputable Chinese tower crane manufacturer that is able to export to the US (ie testament to their quality)."

Yongmao used to export the bulk of its products to USA, Europe and the Middle East. When demands from these markets weakened as a result of financial crisis, Yongmao mounted marketing to sell cranes in China and Asia.

Yongmao's effort has paid off. The following extract from Chairman's statement shows how well Yongmao cranes are received in Singapore:

"To date, we supplied approximately 30% of Singapore’s new towercrane needs....... The opening of our new 240,000 square-metre state-of-the-art manufacturing facilities in Fushun City in the PRC incorporating modern manufacturing process flow, robotic welding arms and other hi-tech machinery. This approximately doubled our previous production capacity and also facilitated our production of larger size towercranes with more sophisticated designs.
Moreover, our constant pursuit of excellent quality and after-sales service has enabled us to establish lasting relationships with our customers. We provide 24-hour assistance to customers through our expert pool of engineers and technicians. As a stamp of trust, Building and Construction Authority Academy of Singapore uses Yongmao towercranes to train their students. Global construction companies have also used our towercrans to build landmarks around the world, including the Beijing National Stadium in the PRC, the Imperial Wharf in London, and the Gold Coast University Hospital in Australia, among others."

[GreedandFear]

Greedandfear

Thank you for the highlights of Tat Hong AGM.

You have stated that Yongmao is a "(v)ery reputable Chinese tower crane manufacturer that is able to export to the US (ie testament to their quality)."

Yongmao used to export the bulk of its products to USA, Europe and the Middle East. When demands from these markets weakened as a result of financial crisis, Yongmao mounted marketing to sell cranes in China and Asia.

Yongmao's effort has paid off. The following extract from Chairman's statement shows how well Yongmao cranes are received in Singapore:

"To date, we supplied approximately 30% of Singapore’s new towercrane needs....... The opening of our new 240,000 square-metre state-of-the-art manufacturing facilities in Fushun City in the PRC incorporating modern manufacturing process flow, robotic welding arms and other hi-tech machinery. This approximately doubled our previous production capacity and also facilitated our production of larger size towercranes with more sophisticated designs.
Moreover, our constant pursuit of excellent quality and after-sales service has enabled us to establish lasting relationships with our customers. We provide 24-hour assistance to customers through our expert pool of engineers and technicians. As a stamp of trust, Building and Construction Authority Academy of Singapore uses Yongmao towercranes to train their students. Global construction companies have also used our towercrans to build landmarks around the world, including the Beijing National Stadium in the PRC, the Imperial Wharf in London, and the Gold Coast University Hospital in Australia, among others."

Thanks ! Just to be clear, I was quoting the CEO of Tat Hong when stating it is a "very reputable company etc"
It does sound like an interesting company that I need to look into. Especially if TH continues to expand its China business and continues to buy all its tower cranes from Yongmao.

[Stockerman]

Wait for the next crisis to buy up cyclical counters like Tat Hong...

I'm still holding on to one lot bought at a high price of $2.66, serves as a reminder of my investing mistakes. Lol

[felixleong]

SINGAPORE – Tat Hong Holdings, Asia-Pacific’s largest crane company, said Tuesday its net profit for the fiscal first quarter ended June plunged 51 per cent to S$8.2 million from the same period last year, due to weakness across most divisions.

Revenue fell 18 per cent to S$175.5 million.

Revenue from the distribution division fell the most, declining 28 per cent from a year earlier to S$66 million in the first quarter, as the economic slowdown dragged on equipment sales in Australia. Weaker demand in Singapore, especially from the marine sector, and a reduction in excavator sales in Indonesia amid weaker commodity prices and more cautious finance leasing by financial institutions to customers also affected turnover, the company said.

Turnover from the general equipment rental unit fell 16 per cent to S$20.5 million, while revenue from the crane rental unit declined 14 per cent to S$68.8 million, partly due to lower demand for specialised transport services, redeployment of cranes in Australia, and the completion of major projects in Malaysia.

The only division to see revenue growth was the tower crane rental unit, which rose 6 per cent to S$20.2 million.

“We remain confident of our crane rental business as the dip in revenue in the first quarter was the result of a number of our cranes being off-hire or in the process of being deployed to new projects. The demand for crane rental services in the region continues to be encouraging, underpinned by a strong pipeline of projects especially in the infrastructure and oil and gas space,” said Tat Hong Managing Director and CEO, Mr Roland Ng.

“Outside of out crane rental business, pockets of weakness exist especially in our subsidiaries in Australia and Indonesia which have impacted our overall performance. However, with the remedial actions that we are taking, we expect to mitigate the situation,” he added.

[Stockerman]

Short !!!

dropping close to 20% and going below 90 cents soon..
13mil shares transacted!!

[AlphaQuant]

scary looking balance sheet

from 2007 til 2013,
gearing has gone from 50 to 70%
no. of shares gone from 460 to 620mio
EPS went from 17c to 5c to 11c
no free cashflow at all

it's a massive expansion drive betting on the commodities boom which unfortunately seems to have come to an end.