TAT HONG HOLDINGS LTD
T03.SI
Tat Hong Holdings: Another potential takeover offer?
- Tat Hong announced on 15 March that they had been approached with regards to a potential transaction “which may or may not lead to an acquisition of the issued share capital of the Company”.
- According to Bloomberg, the Ng family currently holds an aggregated ~56% stake.
- Post 3QFY16 results and on expectations for a subdued outlook to persist, we had a HOLD rating and FV estimate of S$0.45. This is based on 0.45x P/B, which is fairly near 1 s.d. below its two-year historical average and also keeping in mind of its low to negative ROE over the past two financial years.
- Following a general plunge in share price, it has since gained 14.5 cents yesterday on significantly higher volume, effectively incorporating a takeover premium.
- We keep in mind that the group has been in the process of spinning off its tower crane rental business, which operates in China, on the Taiwan Stock Exchange.
- As of 31 Dec-15, the company had a net debt to equity position of about 0.72x, which could be a concern for acquirers whom would likely have to take on its debt obligations.
- Nonetheless, we highlight that discussions are preliminary and there is no certainty that these discussions will result in any transaction.
Jodie Foo
OCBC Securities
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http://www.ocbcresearch.com/
2016-03-16
OCBC Securities
SGX Stock
Analyst Report
0.45
Same
0.45
