Crane Leasing Business

[karlmarx]

i've been looking at several local crane leasing companies like hiap tong, tiong woon, and sin heng. sin heng is more of a distributor with a small leasing portfolio. their latest financial report show profits have fallen off a cliff with the cool down in construction projects. with their high debt levels -- especially for hiap tong and tiong woon -- and low profitability, they may be facing cash-flow problems in the near future. i have no knowledge of the crane leasing industry, and i wonder if anyone here has any insight to share. are rental rates stabilising, or still finding its bottom?

[Musicwhiz]

i've been looking at several local crane leasing companies like hiap tong, tiong woon, and sin heng. sin heng is more of a distributor with a small leasing portfolio. their latest financial report show profits have fallen off a cliff with the cool down in construction projects. with their high debt levels -- especially for hiap tong and tiong woon -- and low profitability, they may be facing cash-flow problems in the near future. i have no knowledge of the crane leasing industry, and i wonder if anyone here has any insight to share. are rental rates stabilising, or still finding its bottom?

I used to be vested in Tat Hong. From what I understand, crane leasing margins are being impacted because of increased competition from foreign players, but it's good if you can download the Tat Hong AR FY 2010/2011 to take a read. There is quite a good operations review inside which will help you with your query.

[karlmarx]

I used to be vested in Tat Hong. From what I understand, crane leasing margins are being impacted because of increased competition from foreign players, but it's good if you can download the Tat Hong AR FY 2010/2011 to take a read. There is quite a good operations review inside which will help you with your query.

ah yes, their sleek-looking AR with lots of pearly wisdom. i read their operations review but they didn't elaborate more than two sentences on their crane rental business in singapore; focusing instead on australia. they did however, quote figures on the moderate growth in construction over the next 4 to 5 years. which unfortunately, doesn't say much about profitability. i believe the bulk of tat hong's earnings come from australia and china?

[Musicwhiz]

Yes, nothing much about profitability but I think their presentation slides may reveal a thing or two about utilization rates for their Tower and Crawler Cranes, which should give an indication of demand. And yes, most of their revenue comes from Aussie (TBG) and China (they set up many JV and subsidiaries over there). But local contributions are also not insignificant. I did not go through the AR in detail but I believe there should be a Note stating the sources of revenue by geographical region, so you could check for that.

[karlmarx]

i was looking at tiong woon's latest FY results and noted that its FCF (cash from operationg activities - cash used in investing activities) is positive $77mil, yet its FY net profit barely managed to stay in the black.

on the other hand, sin heng's latest FY results show that its FCF is negative $16mil, yet it reported a FY net profit of $8mil.

as i have no accounting training, i have no idea what to think from what i see. does this mean that tiong woon's cash flow for FY 2012 will be adversely affected since it has less business from FY11? while sin heng's cash flow for FY12 will see an improvement?