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Net Profit at Tat Hong Down for Second Quarter

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Asia-Pacific’s largest crane company, Tat Hong Holdings Limited (SGX: T03), reported a 14% year-on-year decline in its revenue to S$185.3 million for the second quarter of 2014 (2Q 2014). Tat Hong has four business divisions – Crane Rental, Tower Crane Rental, General Equipment Rental and Distribution –and all the business divisions, turned in a poorer performance in terms of revenue, except for the Tower Crane Rental division.

The net profit was at S$8.2 million, a plunge of 53% as compared to 2Q 2013 mainly due to “the decline in profit contribution from its wholly-owned subsidiaries in Australia as well as from unrealised foreign exchange losses from its operations in Indonesia”.

For the first half of 2014 (1H 2014), revenue was down 16% to S$360.8 million and net profit declined steeply by 52% to S$16.5 million.

As of 30th September 2013, the company sat on a cash balance of S$74.6 million and had a total debt of S$577 million.

For the quarter, the company used S$15.9 million of net cash for operating activities as compared to S$30.1 million used in the previous year. For 1H 2014, S$17.3 million was generated while last year, S$321,000 was used.

An interim dividend of 1.0 Singapore cent per ordinary share has been declared.

Mr Roland Ng, Tat Hong’s Managing Director and Group Chief Executive Officer, said, “Our results this quarter were impacted by unrealised foreign exchanges losses, most of which arose from inter-company loans and payables in relation to our Indonesian operations. While profit contribution from Australia is still below last year’s level, it has improved quarter-on-quarter as the cranes which were being relocated in the first quarter started generating income and as cost containment measures yielded results.”

The shares of Tat Hong closed at S$0.915. It is trading at 8.2 times its historical earnings and has a dividend yield of 4.4%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.