Tat Hong’s 1QFY15 revenue and EBIT were in-line with our estimates - revenue came in 0.9% above our expectation as it declined 6.5% YoY to S$164.2m, while EBIT at S$15.6m was 3.1% below our forecast. However, higher-than-expected tax (actual: S$S$4.1m, estimate: S$2.4m) resulted in PATMI coming in below our estimate as it declined 27.7% to S$6.0m. We think the effective tax rate of 40% this quarter is abnormally high (5-year historical: 27.2%) and thus deem overall results to be within expectations.

Revenue declined YoY across all divisions other than Tower Crane Rental in a similar vein to previous quarter. Gross profit margin painted a different picture as it rose YoY for all divisions except for Crane Rental. We maintain HOLD but put our fair value estimate of S$0.89 under review as we reach out to management later.

Source: OCBC Research - 15 Aug 2014