Tat Hong Holdings recently announced that discussions regarding a potential acquisition of the issued share capital of the company are still ongoing, and there is no certainty or assurance that these discussions will result in any transaction. Since the first announcement released on 15 Mar, there has been no further information provided regarding the said discussions.

We note that crane players have been facing tough competition amid a sustained weak outlook and with valuations at inexpensive levels, further consolidation may naturally occur in the sector. Notwithstanding the potential acquisition, we expect the group to further scale down their non-core, unprofitable businesses.

The Tower Crane Rental segment based in China continues to offer a bright spot for the firm. We currently have a HOLD rating on the stock with fair value estimate of S$0.50.

Source: OCBC Research - 20 Jun 2016