OCBC Investment Research 2015-06-10: HOLD Tat Hong Holdings, SGX

Tat Hong Holdings: Dreary times for crane players

Local crane players such as Tat Hong, Tiong Woon and Hiap Tong Corporation have been facing declines in earnings. Tat Hong’s core market Australia has a persistent muted outlook while other peers’ key market Singapore remains challenging amid an oversupply situation.

Tat Hong does seem to have some stability in other markets like Hong Kong, Thailand and Malaysia. The group’s tower crane rental business in China is the only business segment that grew over FY15 on the back of large commercial and power plant projects.

Nonetheless, these companies are pushing for cost cutting measures to help tide them over tough times. On expectations for a stagnant year ahead, we have reduced our FV estimate for Tat Hong from S$0.63 to S$0.60 and we keep our HOLD rating. While there is a lack of catalysts, we keep in mind that the group is still exploring a potential spin-off of its tower crane rental business. (Jodie Foo)

SGX: Appoints new CEO

Singapore Exchange (SGX) announced last evening the appointment of Mr Loh Boon Chye as the new CEO and his appointment will take effect from 14th July 2015. Prior to this, He was the Deputy President and Head of Global Markets for Asia Pacific at Bank of America – Merrill Lynch.

We do not expect to see any immediate significant changes for the coming half year and are maintaining our earnings estimates for now. We have a HOLD rating for the stock with a fair value estimate of S$7.95. At yesterday’s closing price of S$7.93, the stock is providing a dividend yield of 3.5%. (Carmen Lee)

Source: http://www.ocbcresearch.com/

SGinvestors.io - Where SG Investors Share