TAT’s sales growth to surge 32%

Thanks to Malaysia and Thailand’s robust construction demand.

According to DBS, TAT's growth momentum will be strong driven by regional construction demand. DBS also says, 32% FY14F growth forecast driven by regional construction demand.

Here’s more:

We believe growth momentum will remain strong for TAT in FY14F/FY15F.  TAT operates in an environment of rising crane demand on the back of robust regional construction outlook.  With crane rental demand outpacing crane supply, utilisation and rental rates will therefore be buoyant in our view.

TAT’s crane fleet expansion of c.165 cranes in FY13F thus validates our view, positioning itself to exploit the strong rental demand situation for the next two years. We see construction demand coming from Malaysia and Thailand, where infrastructure spending is expected to be strong, including MRT construction projects and oil & gas projects. In Singapore, the S$18b Thomson MRT Line is expected to commence construction this year.

Growth is fundamentally supported by rising utilisation and crane rental rates. We believe strong crane rental demand and tight crane supply in the market will drive near term utilisation and crane rental rates higher. We see fleet utilisation reaching 80% by FY15F and rates trending 16% higher by FY15F. Our strong growth outlook in FY14F/FY15F at 32%/16% reflects these trends.