Tat Hong at 11-mth high

Singapore

Shares of crane rental company Tat Hong Holdings were lifted to their highest in at least 11 months on Tuesday after the group said in the morning that it was considering a potential offer to buy some of its stock.

"The company has been approached in connection with a potential transaction which may or may not lead to an acquisition of the issued share capital of the company," it said in a Singapore Exchange filing before the market's opening bell.

From Monday's close of S$0.49, the stock surged as high as S$0.675 in intra-day trading. It then eased to close at S$0.635, up 29.6 per cent or 14.5 Singapore cents, a level last seen in April last year.

Trading volume also rocketed, with 12.6 million shares having changed hands by the end of Tuesday's session - several times the roughly 945,000 shares traded on Monday.

Though the group threw in the usual disclaimers, saying that "discussions are preliminary and there is no certainty or assurance whatsoever that these discussions will result in any transaction", it also said it has appointed Rippledot Capital Advisers as its financial adviser in connection with the "approach". It did not provide any details about the potential acquirer.

Mainboard-listed Tat Hong was flagged by DBS Group Research last week as a potential candidate for privatisation. In a March 8 note, the research house said Tat Hong, Singapore's largest crane operator, was "currently trading at just 0.4x P/B but over 100x PE as its earnings are being depressed due to the oversupply situation in the market". "With major shareholders holding over 50 per cent in the company, it is possible for Tat Hong to emerge as a privatisation or takeover candidate."

The group is controlled by the Ng family. Roland Ng, group chief executive officer, had an indirect stake of 42.44 per cent as at June 15 last year, according to its 2015 annual report.

Tat Hong said in February this year that it made a net loss of S$6.7 million, or 1.06 Singapore cents per share, in its fiscal third quarter on the back of weak demand in South-east Asia and Australia.

Revenue for the three months ended Dec 31 fell 19 per cent year-on-year to S$124.8 million. "The group is facing difficult economic and sectoral outlooks in its key markets and expects its performance to be depressed in FY2016," Tat Hong had said. "Consequently, the group will continue to rationalise its operations and its defleeting exercise to reduce overall operating costs."

Incidentally, shares of another crane owner, Tiong Woon, also jumped on Tuesday. The counter climbed 15.6 per cent or 3.5 Singapore cents to S$0.26. Tiong Woon did not put out any bourse filings before or during trading on Tuesday.