Hiap Tong

Hiap Tong: "Growing investor interest after share price more then doubles year-to-date", Mobile-crane specialist Hiap Tong has seen a pick-up in trading activity, while share price has more then doubled since the start of the year, helped in part by wider broker coverage on crane operators amid a buoyant construction sector in Singapore and the region. Hiap Tong’s niche lies in its fleet of 120 mobile cranes, which are primarily employed in the oil and gas sector and contributes to the bulk of its revenue. As part of its expansion strategy, the group had placed orders for another $40m worth of cranes in 2H12, which are expected to be delivered this year, after taking into account the six to 12-month lead-time. In a recent interview with The Edge magazine, the group projected the utilization rate of its fleet to remain at 80% and rental rates to stay firm, thereby sustaining its earnings momentum in the current year. Hiap Tong however has no plans to expand overseas aggressively for now, citing capacity constraints due to high demand in Singapore. Nevertheless, it has recently opened an office in Johore to tender for jobs in Trengganu and Kuala Lumpur. Meanwhile, the group is proposing a private placement of 50m new shares at $0.217 each to 17 investors to raise $10.9m, to fund its capital expenditure, marketing expenses and working capital. The placement represents ~19.4% of the group’s existing share capital, which could improve its free float of ~24% and potentially enhance its stock liquidity. At the current price of $0.28, the stock trades at 14.7x trailing P/E versus larger peers Tat Hong at 11.6x and Tiong Woon at 19.8x.