Tat Hong Holdings reported its 1QFY18 results. Revenue was up 1% YoY to S$118.3m and the group recorded a slightly lower pre-tax loss, but saw a higher net loss of S$5.1m vs. S$3.6m in 1QFY17 mainly due to an absence of tax benefits for this quarter.

Revenue performance this quarter was helped by an improved performance across all business segments except for the Crane Rental division. However, margins were weaker for the Crane Rental and Tower Crane Rental division. While the Crane Rental segment in key market Australia has shown signs of recovery, the industry is still facing depressed rental rates and excess capacity.

According to management, the silver lining is the improvement in EBITDA from S$3.6m in 4QFY17 to S$20.2m in 1QFY18. In addition, the group expects continued healthy demand in China and expects utilization rates of their tower crane to remain stable, given the medium to long-term projects.

As such, we are keeping our HOLD and fair value of S$0.40 for now.

Source: OCBC Research - 15 Aug 2017