In this final Part 3, we will look at Tat Hong’s Inventory levels and I will comment on their slow but steady transformation into a “rental” company and also their building of their tower crane business in China. I will also give a quick summary and low down on the progress of their planned China expansion so far, based on announcements filed with the SGXNet.
Crane Fleet Profile
Total Fleet Profile Review
It can be seen from the table above that Tat Hong’s total number of crane units has been rising steadily over the quarters, and one would notice that the total tonnage has been steadily increasing as well. It has risen from just 41,840 tons as at June 30, 2007 to the current 49,401 tons as at Sep 30, 2009. The most recent 3Q 2010 results show that as at Dec 31, 2009 total tonnage has once again risen to 51,156 tons, and this is the first time in 2 years that I had witnessed it surpassing the 50,000 ton mark. The focus has also been to build up more of the heavier tonnage cranes, with the >250 metric tonnes cranes rising from 32 as at Mar 31, 2007 to 46 as at Sep 30, 2009 and further to 53 units as at Dec 31, 2009. In the 100-149 MT and 150-249 MT categories, one can also note a steady rise in the number of such cranes. Presumably, these cranes have higher demand and can command better rental rates in the market, which is why the Group is slowly stockpiling on these units. Lower tonnage cranes tend to be more “generic” and there are many smaller competitor companies which can provide such cranes, so Tat Hong probably has less of a competitive edge with regards to bidding this segment; and thus also most likely enjoys lower margins. Read more...