Tat Hong Q3 earnings up 20% to $21.2m

TAT Hong, the world's largest crane company, hoisted its third-quarter earnings by 20 per cent to $21.2 million, thanks to strong demand and better margins in all its key markets.

The earnings boost for the October-December 2007 quarter was achieved on the back of a 17 per cent increase in revenue to $157.9 million, from $135.3 million a year earlier.

On a year-to-date basis, the company lifted its earnings for its first nine months of FY08 by 65 per cent to $61.4 million, on the back of a 31 per cent rise in revenue to $456.2 million.

During the quarter, crane rental revenue contribution almost doubled due to higher rental rates, strong demand from Australia's resources sector, and higher contribution and rising utilisation rates from projects in Singapore, Malaysia and the Middle East.

As a result, gross profit margin increased from 30.5 per cent a year ago, to 39.6 per cent during the 3Q/FY08 period.

Gross profit was up 52 per cent to $62.6 million.

The only segment which saw a decline was equipment sales, which decreased 8 per cent from $78.9 million, to $72.7 million. The company attributed this to a delay in shipment of cranes.
On a segmental basis, gross profit from the flagship crane rental business more than doubled to $32.6 million during the quarter, from $16.2 million in 2006.

Roland Ng, Tat Hong's president and chief executive officer, sounded bullish on prospects for the company, going forward.

'The outlook for our industry is very positive,' he said. 'And this is particularly so for Asia in general, and Singapore in particular, which sits at the epicentre of this growth. We are in the right industry, in the right place, at the right time.'

He said construction demand in Singapore this year would surpass the previous high of $24.4 billion in 1997.

'And the strong growth we are seeing now will continue for the next three years.'

Meanwhile, the company is listing its 21 per cent held China subsidiary, Yongmao Holdings Ltd, here next week.

Mr Ng said investor reception to the IPO had been very good, given the strong prospects for the China- based company.

'Demand for tower cranes in China is outstripping supply,' Mr Ng said. 'And this demand will grow even more as that country's infrastructure needs, especially in the energy sector, intensifies.'

Yongmao launched its IPO offering of 115 million shares at 35 cents a piece on Jan 31. It will start trading on the Singapore Exchange on Feb 21.

BT understands that all placements shares have been fully subscribed.

Tat Hong's stake will be diluted to 15.7 per cent after the listing.

This is the second listing of a subsidiary by the Singapore-listed crane giant. In end-2005, it listed its Australian subsidiary Tutt Bryant, which has since grown to become one of the country's biggest and most successful crane companies through both organic growth andacquisitions.

Tat Hong's latest results boosted the company's earnings per share for the nine months to end December by 51 per cent to 12.13 cents.