Maybank-Kim Eng turns more optimistic on Tat Hong after a management meeting. “The strong performance of the past few quarters suggests that Tat Hong’s recovery is taking place even faster than we expected,” it says.
“Tat Hong is experiencing the best time in its operating history with booming demand from all countries it operates in. Current order book already provides good earnings visibility for at least the next two years.”
It notes Tat Hong is able to charge a premium over competitors due to its cranes’ higher quality, wider product range, larger fleet size and less competition in the high-tonnage crane segment; it expects the pricing advantage to continue as no regional peers can achieve a comparable fleet size near-term.
It raises its FY13-15 net profit forecasts by 19.2%, 13.3% and 2.7% respectively after increasing rental-rate assumptions by 14.6%-15.7%, but it says its estimates may still be conservative. It increases its target to $1.74 from $1.41, keeping a Buy call. “Coupled with its strong and rising dividend yield, Tat Hong offers both growth and yield which is a rare and potent combination.”
The stock is up 4.4% at $1.30.
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