TAT HONG - A risk worth taking...

Just sharing OCBC report:

Weakness already priced in :

Following our recent discussion with Tat Hong’s management, we are upgrading Tat Hong to HOLD and raise our valuation peg to 11x (previously 9x) and fair value estimate to S$0.96 (previously S$0.80). We feel that the stock has bottomed since the sell-off after its disappointing 1Q14 results, and that the street has adequately priced in its expectations for a weakened performance for the remainder of FY14. Its key market of Australia should start to see a pickup in business activity by early FY15 on commitments on infrastructure spending by the new Coalition government and as improving business confidence translate to actual spending. In the interim, relative stability from its SEA and greater China markets will help to offset some of the shortfall in performance figures for FY14. (Lim Siyi)

ocbc is always so optimistic on tathong.

hahaha

Tathong derived 50% of their revenue from Australia.
With the end of commodities boom, mining activities will be scaled down. With that, lower demand for their cranes and other equipment.
The next engine of growth - China tower crane - never get going after 4/5 years of massive investment.

don't get me wrong..it is still a profitable company.
But at the present price of 90 plus cents, it is far too expensive.

Since I first posted about Tat Hong on 15 Sep, it has reached a peak of $1.03 from 87 cents(price I bought when I first posted about Tat Hong here). Profit taken along the way during the USA debt ceiling debacle as I do not want to risk a USA default although my TP is around $1.20.

Now is back to around 90 cents region. Maybe a good time to take a look at it.

As I mentioned before, under 90 cents is a good entry price. Will buy again if it falls under 90 cents.

divads27 wrote: 15 Sep 2013
Tat Hong has been bashed down due to one quarter of bad results. This is not the first time Tat Hong having bad quarters. In Feb 2011, also bad quarter but eventually results return to normal and so did the share price.

Is always a better choice to buy when everyone else is selling than buying when everyone is buying.

I forsee their results will return to normal based on

1) Management taking pro-active steps to remedy the drop in profit
- Shifting some operations to Johor

2) A one time gain from disposal of a piece of land at 11 Jul Ave.

3) The company bought 2 land parcel in Iskandar Malaysia, may see capital appreciation later

4) Australia new PM Abbott has promised to spend billions in infrastructure which will benefit Tat Hong

5) China economy is getting better

6) Venturing into Myanmar , which is a growth monster

As and when results return to normal level, share price will go back to $1.20 easily.

Anyway there is a article that is positive on Tat Hong. www.vertikal.net/en/news/story/18102/

Quote: Vertikal Comment

While the numbers do not look great for the quarter, a good deal of this is timing related, although Australia is a significant part of the business and with the Chinese economy slowing, Australia is likely to be affected.
Tat Hong has very good geographic spread across Asia and will almost certainly benefit from buoyancy in other parts of the region and is likely to meet its full year forecasts in spite of the slow start.


Of course there are a few analyst which issue sell recommendation due to the one bad quarter. Maybank and one other I cant remember.

I think overall is a risk worth to take to buy Tat Hong under 90 cents..

Way back on the 15th September, I written that the Iskandar properties will appreciate, now from the latest, the earning is $14.2M. Will buy when it goes under 90 cents.