Tiong Woon

Tiong Woon: has entered into a legally binding MOU to sell its fabrication yard business (wholly owned subsidiary) at a consideration of $18.0m. DMG views the disposal positively. Despite the subsidiary having been generating losses over the past few years (FY12: $-3.8m, FY11: $-3.9m), Tiong Woon was still able to sell it at a surprise gain of $2.0m. Now that the losing-making unit is gone, the group can channel its resources to focus on its main crane chartering business. The house believes Tiong Woon is on track for a strong recovery underpinned by the robust crane chartering demand in the region. It also bodes well with the latest mapout from the Singapore infrastructure white paper. Once the transaction is completed, DMG thinks the group may look into increasing its dividends payout in view of the huge cash inflow. The counter has been overlooked by the Street, with no active coverage, whereas its peer Tat Hong has been receiving much attention. Tiong Woon had a difficult year last yr. But its 9.4x fwd P/E , 0.8x P/B means it is more attractively valued vs Tat Hong's 12.8 fwd P/E and 1.3x P/B. The stock has riding on a positive longer term uptrend since Aug 2011 (albeit with some volatile interim periods). The clear rebound off the $0.325 low suggests that the worse could be over for the stock, from a technical perspective. Chart watchers may watch for a clear break of the $0.40 levels which would position Tiong Woon as a bullish breakout candidate. A pullback towards support at the $0.36 level could provide a window for accumulation.