20.11.2017

Revenues boost for Tat Hong

Singapore based rental crane company Tat Hong has reported a more positive set of numbers for the second quarter and first half.

Total revenues for the six months to the end of September were seven percent higher $242.6 million, this was made up of four divisions, Crane Rental at $63.4 million down 12 percent on the same period last year. Tower Crane rental – most in China – with revenues nine percent higher at $54.7 million, General Rental revenues in Australia jumped 30 percent – albeit from a low level - to $28.6 million and distribution was 16 percent higher at 95.9 million. The pre-tax loss for the period was reduced from $7.3 million last year to $6 million this year.

Moving on to the second quarter numbers, total revenues were 13 percent higher at $124.3 million, with Crane Rental down six percent to $32 million, with lower rental rates in Singapore, lower activity levels in Batam and the completion of projects in Hong Kong, partly offset by higher utilisation rates in Malaysia and Australia. Tower crane rental revenues increased 11 percent to $28.2 million sue to greater volumes from the enlarged fleet.

General Equipment Rental continued its upward trend with revenues rising 34 percent to $14.6 million, due to improved utilisation and the start of a number of new infrastructure projects. Distribution sales were 25 percent higher at $49.4 million, due to higher equipment and parts sales in Australia, partly offset by lower demand for cranes in Thailand, Vietnam and other overseas markets such as Middle East, the Philippines and Bangladesh.
Pre-tax losses for the quarter were reduced from $3.5 million last year to $2.7 million this year.

Chief executive Roland Ng said: “We are heartened by the improved performance from our Australian operations under the Tutt Bryant Group which saw a broad-based recovery of demand especially from the infrastructure sector. The Tower Crane Rental business in China continued to perform well as it is involved in mostly long term projects and its pipeline remains healthy. Our tower crane utilisation rate continued to be high, at 82 percent, despite operating a larger fleet compared with last year.”

“Pockets of weakness still remain in our Crane Rental and Distribution businesses in the ASEAN region due to anaemic demand and competitive pricing. These weaknesses have posed a drag on the Group’s overall performance. Though the Group’s net loss has narrowed considerably, we have not eased our efforts in curbing our operating costs and capital expenditure.”

Vertikal Comment

While these top line numbers are encouraging, it is slightly surprising that more of the gain has not flowed through to the bottom line. Perhaps due to the mix? The company is clearly quite dependant on the mobile crane division doing well to be truly profitable. However the tower crane business continues to do well in a market with tremendous long term potential and it is good to see the Australian operations really bouncing back.

The second half ought to be a good deal better and it looks as though the company is on an upward trajectory. A perfect time for the propose buy in from Standard Chartered See Private Equity bid for Tat Hong