Tat Hong

Tat Hong: DBSV maintains Buy and raises TP to $1.70. Note that 2Q13 results slightly ahead. Headline net profit of $17.3m (+37% y-o-y, +4% q-o-q) was slightly ahead of house estimates, due to growth in crane rental businesses and JV/associates income. Tower and mobile crane rental businesses grew 27% and 52% y-o-y on the back of higher fleet utilisation. Gross margins were relatively stable at 37%. JV and associates income contribution improved, aided by a turnaround from Papua New Guinea’s JV. 1H13 earnings now account for 54% of full yr forecasts. TAT declared an interim dividend of 1Scent. Raise FY13F/14F earnings by 15%/16% on better utilisation, rates. Positive on fleet utilisation and rental rates going forward, supported by robust crane demand in contrast with tight crane supply in the market. Regional construction projects and oil & gas projects in Aus remain buoyant, while limited production capacity of crane manufacturers will ensure that crane rental demand continues to outstrip crane supply. Hence, remain optimistic on TAT’s fleet utilization and rental rates going forward. Revise earnings by 15%/16% for FY13F/FY14F in anticipation of higher utilisation and rental rates.