Tat Hong issued a profit guidance yesterday evening for its 3QFY16 results. The group expects to report a loss for the quarter due to costs and provisions associated with exiting the excavator distribution business in Indonesia, weak performance from its Australian operations as well as foreign exchange losses. These factors have been dragging earnings for the past few quarters.

Recall that the group's 1HFY16 PATMI was S$7.2m, while we were forecasting PATMI for FY16F at S$12.5m. Results will be released on 12 Feb after market close. As we wait for further details on the extent of such losses, we currently have a HOLD rating and fair value estimate of S$0.56 on the stock.

Source: OCBC Research - 28 Jan 2016