Tat Hong Holdings - Sell-off provides entry opportunity; fundamentals intact; U/G to Buy

Source of opportunity
We view the recent 34% pull-back in Tat Hong’s (TAT) share price as an
attractive entry point. We think the multiple compression is overdone and
current level has more than reflected conceivable earnings concerns. We
see no change to its solid fundamentals and continue to like its defensive
business model and strong earnings visibility given exposure to the
resilient infrastructure and oil & gas sectors; growth prospects of recurring
net profit of TAT remain healthy at 74%/26% in FY08/09E. Its solid balance
sheet, attractive FCF yields and quality mgmt should also stand out in
current volatile markets. Upgrade to Buy from Neutral; new TP is S$2.80.

Tat Hong Holdings (S$2.48) - CIMB GK

- Buying opportunity
The share price of Tat Hong has fallen 7.7% in the past one month, despite posting a good set of 3QFY08 results on
13 Feb 08. Despite global equity markets being weak in the past months, the selldown on TAT shares has been
excessive and unwarranted as TAT’s strong fundamentals remain intact. In addition, the business outlook remains
positive with robust construction demand for cranes while the recent successful listing of its China associate,
towercrane manufacturer Yongmao Holdings should provide a boost in sentiment. Valuations are attractive and with
forward P/E near recent lows. Reiterate Outperform with a target price of S$4.43, based on CY09 P/E of 15x.