Tat Hong

Tat Hong: Posted a +192% YOY increase in earnings to $11.19m for 4Q12. Rev rose 19% to $181.94m yoy, on improved performance in all business segments. Gross profit margin rose to 39.4% from 34.7% for the corresponding previous quarter, on improved rental rates and higher utilisation from the crane rental and general equipment rental divisions. Citi upgrades to Buy from Sell and increases TP to $1.40 from $0.64. Upgrade is underpinned by a recovery in equipment sales and rising utilization levels for its crawler crane division across the region. As a result, believe the strength of recovery has been overlooked and expect net profit to reach $70m and $78m in FY13E and FY14E respectively. House EPS is the highest in the Street and suggests FY12-15E CAGR of 26%. We do not rule out possibility of investors switching out of Sin Heng into Tat Hong, on back of these strong set of results, and the disappointing price stake sale in Sin Heng.