Tat Hong Posts Pre-tax Profit of S$2.9 million for 3QFY2017
The Group posted a profit before tax of S$2.9 million and net profit after tax and minority interests of S$0.2 million for 3QFY2017 compared with a pre-tax loss of S$6.9 million and a net loss of S$6.7 million in 3QFY2016.
On the Group’s performance in 3QFY2017, Mr Roland Ng San Tiong, Tat Hong’s Managing Director and Group CEO, said, “It is heartening to note that the majority of our businesses posted topline growth in the third quarter. Our tower crane rental business continued to perform well and has secured a good pipeline of potential projects for the future as infrastructural development in Chin continues unabated. However, weak demand for crane rental services, particularly in Australia and Singapore, posed a drag on the Group’s performance, resulting in a marginal 3% decline in revenue to S$121.5 million.”
The Group saw a higher share of profits from its associates and joint ventures of S$1.4 million compared with S$0 .3 million a year ago due to better performance by an associate company.
The Group’s total operating costs fell 7% to S$40.7 million in 3QFY2017 from S$43.6 million incurred in 3QFY2016 due primarily to a reduction in manpower, travelling and maintenance expenses, as well as lower foreign exchange losses.
Tower Crane Rental
The Tower Crane Rental Division continued to perform well and posted a revenue increase of 14% in 3QFY2017 to S$27.4 million. Excluding the effect of the weaker RMB against the Singapore dollar, revenue received in the local currency increased by a robust 21%. The division continued to record high utilisation rates in excess of 80% from the deployment of its tower cranes to new projects in the infrastructure, power generation, transportation and commercial building sectors.
General Equipment Rental The commencement of new projects in the infrastructure and renewable energy sectors in Australia in the third quarter resulted in better utilisation of the division’s equipment.Despite lower rental rates, revenue posted by the General Equipment Rental Division increased 5% in 3QFY2017 to S$11.6 million compared with S$11.1 million posted in the previous corresponding quarter.
Distribution Revenue contribution from the Distribution Division for the quarter under review improved 21% to S$52.2 million compared with S$43.3 million recorded a year ago as a result of better equipment sales to Malaysia and other overseas markets such as Japan and Europe partially offset by lower sales in Singapore. Equipment and spare parts sales in Australia remained comparable to that achieved in the same quarter a year ago.
Net gearing as at 31 December 2016 was 0.66 times (31 March 2016: 0.71 times).
In addition, property, plant and equipment with net book value of S$9.1 million was reclassified to “Assets held for sale” as at 31 December 2016 as the Group had
committed to a plan to sell the assets. Impairment loss of S$0.6 million had been recognised on a unit of barge.
Cash flow
The Group recorded a healthy cash and cash equivalents of S$96.8 million (excluding bank deposits of S$23.0 million earmarked for certain banking facilities), resulting from net cash flow generated from operating activities and disposal of property, plant and equipment. However these were offset by the increase in cash balances earmarked for banking facilities, net repayment of trust receipts, bank loans and finance lease obligations, interest payments, and purchase of property, plant and equipment and intangible assets. As a result, cash and cash equivalents declined marginally by S$0.9 million in 3QFY2017 from 30 September 2016.
Net cash from operating activities +S$25,426,000
Net cash from investing activities +S$26,459,000
Net cash used in financing activities -S$(52,822,000) repayment of loans
On the rights issue which was successfully completed on 10 February 2017, Mr Ng said: “On behalf of the Board of Directors, I would like to thank all our shareholders for their strong support of our recently concluded rights issue which saw a high subscription level of 155%. The total net proceeds raised of approximately S$41.0 million has put the Group in a stronger financial position and conferred to us greater financial flexibility which is crucial at this point in time given the many uncertainties in the global and regional markets.”
Source: 3Q'17 Press Release
Last edit: 7 years 9 months ago by iCann. Reason: update
If a company's current assets do not exceed its current liabilities, then it may run into trouble paying back creditors in the short term. The worst-case scenario is bankruptcy. A declining working capital ratio over a longer time period could also be a red flag that warrants further analysis.
For example, it could be that the company's sales volumes are decreasing and, as a result, its accounts receivables number continues to get smaller and smaller.
Working capital also gives investors an idea of the company's underlying operational efficiency. Money that is tied up in inventory or money that customers still owe to the company cannot be used to pay off any of the company's obligations.
So, if a company is not operating in the most efficient manner (slow collection), it will show up as an increase in the working capital. This can be seen by comparing the working capital from one period to another; slow collection may signal an underlying problem in the company's operations.
Budget 2017: Singapore aims to boost economic growth, support weak sectors
To boost the construction sector, Heng says Singapore will bring forward some $700 million of public sector infrastructure projects.
The construction sector will also receive a total of $150 million to procure innovative construction solutions for public sector projects.
The government, however, will be pushing ahead with announced foreign worker levy increases for the construction sector.
In addition, Singapore expects to spend more than $20 billion over the next five years to almost double the country’s train network by 2030.
Meanwhile, it is deferring increases in foreign worker levies for the hard-hit marine sector, as well as the process sector. These will include companies manufacturing petroleum, petrochemicals, speciality chemicals and pharmaceutical products.
Last edit: 7 years 9 months ago by iCann. Reason: update
Tat Hong raises stake in China unit with S$5.9m share purchase Monday, February 27, 2017 - 17:48
CRANE rental company Tat Hong Holdings said on Monday it has raised its stake in its Chinese tower crane rental unit, THEC by buying 2.13 million shares for about S$5.9 million.(effectively valuing the THEC at S$216m while Tat Hong's market cap is S$283m at $0.37 per share).
The Transaction was conducted at arm’s length on a willing buyer, willing seller basis and the consideration was based on the net asset value of THES as at 31 March 2016.
Tat Hong bought the entire interest of THES held by Joyful Shine Holdings, raising its effective stake in the unit, Tat Hong Equipment Service, to 84.6 per cent.
As THES is a profitable company and as the prospects for the tower crane rental business in China remain healthy in the near to medium term, THEC agreed to acquire JSH’s entire interest comprising 2,128,250 THES Shares when JSH decided to exit its investment.
Tat Hong said the prospects for the tower crane rental business in China remain healthy in the near to medium term.
Last edit: 7 years 8 months ago by iCann. Reason: update
Asia’s infrastructure race is just getting started.
Emerging economies across the region will need to invest as much as $26 trillion on building everything from transport networks to clean water through 2030 to maintain growth, eradicate poverty and offset climate change.
That’s according to an Asian Development Bank report released Tuesday that highlights the need for massive construction and upgrading of public works and for much greater private sector investment. Leaving out spending to mitigate climate change, some $22.6 trillion will still be needed over the same period, the ADB said.
Big-ticket investment of $14.7 trillion is needed for power, $8.4 trillion for transport, $2.3 trillion for telecommunication costs and $800 billion for water and sanitation, adjusted for climate change.
With construction plays rallying, which ones should you look out for?
By:
Michelle Teo
03/03/17, 03:46 pm
SINGAPORE (March 3): The construction business had been on the slump, but with a slew of public infrastructure and civil engineering projects up for grabs and with more on the horizon, construction stocks have rallied and are likely to continue its ascent over the next few years.
The Building and Construction Authority estimates public sector construction demand at between $18 billion and $23 billion a year from 2018 to 2021. On the whole, total construction demand is expected to average between $26 billion and $37 billion a year.
In February, several construction stocks hit their 52-week highs, with Hock Lian Seng Holdings, a civil engineering firm specialising in works for bridges, highways and MRT tunnels, up 56% this year.
Meanwhile, Chip Eng Seng Corp, a HDB building contractor and condominium developer, has rallied 15.87% higher this year.
Many in the construction industry have diversified their businesses during the downturn in hopes to ride out the bumpiness, but not all have been equally successful even though the worst is now behind them.
Lian Beng Group, for instance, have gone on to develop residential and commercial properties while Tiong Seng Holdings, known for having constructed a number of key commercial and residential buildings, ventured into property development in China.
TTJ Holdings, a steel structure specialist, even ventured into running a workers’ dormitory.
