Looking at Tat Hong’s total fleet profile, it can be seen that their inventory levels have hit a new high of 481 units even as they are trimming their inventory and boosting their fixed assets (transfer from trading stock to fixed assets for rental). The one glaring figure which explains the depressed performance is the overall utilization rate of just 56.6%, which is a far cry from their “peak” performance of 83.5% utilization as at June 30, 2007 (nearly 3 years ago). This would explain why revenues for crawler crane rental are so depressed – companies have not really kick-started their spending on buildings, oil and gas projects and infrastructure as these will lag the economic recovery; hence Tat Hong’s performance in this division will generally lag the economy by about 6 to 9 months.
The total tonnage for cranes has increased significantly though, from just 46,261 to 51,216 in one year (a 10.7% increase). Total units has also steadily increased from 438 units nearly 3 years ago to the present 481 units. Moving forward, Tat Hong should continue to focus on their transition to being a “rental” company, with more inventory moved over to fixed assets to be utilized for rental instead of for equipment sales. The effects of this may only begin to manifest over a period of 1 to 2 more years. Read more...Part 3 of this analysis delves into Tat Hong’s inventory levels for crawler cranes as well as tower cranes. It also attempts to discuss Tat Hong’s prospects for the next financial year and beyond by incorporating recent news as well as from attendance at Tat Hong’s FY 2010 AGM which was held on July 27, 2010.
Crane Inventory Levels (All Cranes)
Looking at Tat Hong’s total fleet profile, it can be seen that their inventory levels have hit a new high of 481 units even as they are trimming their inventory and boosting their fixed assets (transfer from trading stock to fixed assets for rental). The one glaring figure which explains the depressed performance is the overall utilization rate of just 56.6%, which is a far cry from their “peak” performance of 83.5% utilization as at June 30, 2007 (nearly 3 years ago). This would explain why revenues for crawler crane rental are so depressed – companies have not really kick-started their spending on buildings, oil and gas projects and infrastructure as these will lag the economic recovery; hence Tat Hong’s performance in this division will generally lag the economy by about 6 to 9 months.
The total tonnage for cranes has increased significantly though, from just 46,261 to 51,216 in one year (a 10.7% increase). Total units has also steadily increased from 438 units nearly 3 years ago to the present 481 units. Moving forward, Tat Hong should continue to focus on their transition to being a “rental” company, with more inventory moved over to fixed assets to be utilized for rental instead of for equipment sales. The effects of this may only begin to manifest over a period of 1 to 2 more years. Read more...
Looking at Tat Hong’s total fleet profile, it can be seen that their inventory levels have hit a new high of 481 units even as they are trimming their inventory and boosting their fixed assets (transfer from trading stock to fixed assets for rental). The one glaring figure which explains the depressed performance is the overall utilization rate of just 56.6%, which is a far cry from their “peak” performance of 83.5% utilization as at June 30, 2007 (nearly 3 years ago). This would explain why revenues for crawler crane rental are so depressed – companies have not really kick-started their spending on buildings, oil and gas projects and infrastructure as these will lag the economic recovery; hence Tat Hong’s performance in this division will generally lag the economy by about 6 to 9 months.
The total tonnage for cranes has increased significantly though, from just 46,261 to 51,216 in one year (a 10.7% increase). Total units has also steadily increased from 438 units nearly 3 years ago to the present 481 units. Moving forward, Tat Hong should continue to focus on their transition to being a “rental” company, with more inventory moved over to fixed assets to be utilized for rental instead of for equipment sales. The effects of this may only begin to manifest over a period of 1 to 2 more years. Read more...
