Tat Hong Holdings’ 1QFY17 revenue declined 16% YoY to S$116.7m, meeting 23% of our full year expectations, as all business segments other than Tower Crane Rental segment recorded lower revenues. The group also reported a net loss of S$3.6m vs. a net profit of S$2.8m in 1QFY16, due to unrealized foreign exchange losses arising from unfavourable currency movements.

This referred to the depreciation of AUD, USD and RMB against the SGD and the appreciation of JPY vs. AUD and SGD. About S$5.2m of net FX losses was incurred, of which S$4.2m was unrealized FX losses. Excluding oneoffs, estimated core PATMI would have been a small profit of ~S$0.6m.

As demand in most markets continues to remain subdued for the year, we expect the Tower Crane Rental segment to support earnings for the group. Maintain HOLD with fair value estimate of S$0.55 at this juncture.  

Source: OCBC Research - 15 Aug 2016