Tat Hong

Tat Hong: HSBC initiates on counter with an OVERWEIGHT rating and $1.66 TP (implied upside of 84%), based on a DCF valuation. Being the largest crane company in Asia Pacific with a diversified fleet portfolio serving various industries, Tat Hong's earnings growth will be supported by the robust demand in ASEAN and China, outweighing near-term headwinds from Australia’s downturn. HSBC expect Tat Hong’s overall revenue to grow c.7% CAGR in FY13-16e, driven by crane and tower crane rentals, in view of the positive economic outlook in the countries in which the group operate. Rental rates are expected to remain stable in the near term in Australia, while there may be some pressure on rental rates in Asia due to the availability of cheaper cranes from China.