Tat Hong’s operating profit plunged 43% in Q2

Revenue also fell by 18%.

Mainboard-listed Tat Hong Holdings reported that its operating profit fell 42.9% to $12.6m in Q2, down from $22.1m in the same quarter last financial year.

Its revenue fell 18% year-on-year to $153m, due to weaker sales from its distribution, crane rental, and general equipment rental segments.

According to DBS, revenue from Australia remains weak ($74m), registering a 4% decline both year-on-year and quarter-on-quarter. Oil and gas projects in Gorgon and Ichthys are ongoing. 

“As TAT’s business is subject to slowdowns in the sectors it is exposed to, weakness in construction, oil and gas exploration and mining projects in Asean as well as Australia would potentially hurt crane rental utilisation and hence impact earnings,” noted DBS.

Here’s more from DBS:
However, construction and mining resources projects are not expected to pick up rapidly going forward. We therefore expect a slow recovery outlook for Australia.

Listing of China business remains preliminary. The tower crane business contributed 13% of group revenue (S$90m) and segment profit (S$11m) for FY14. We estimate that the market cap of the listed entity would be <S$110m (vs Tat Hong's current market cap of S$480m) at a valuation of <10x PE.