Tat Hong

Tat Hong: OCBC downgrade to Hold with $1.31 TP, recommending investors to take profit. Since ast upgrade on Tat Hong Holdings, the group’s crane fleet grew by ~20% (in tonnage), utilization rate by 5 ppt and rental rates by an estimated 10-15%, resulting in a 66% jump in FY13 PATMI. In house view, the easy money has already been made. Investors who have heeded our call would have made 45% return in 1.5 yrs and should now consider taking some profit. Looking ahead, the macro environment looks increasingly uncertain with sluggish data points coming out of China. Tat Hong’s crane fleet expansion is also expected to slow after a 79% surge in crane tonnage over the past five years. Finally, there is a possible share overhang resulting from private equity AIF Capital’s conversion of convertible preference shares to 53.3m ordinary shares.