OCBC Investment Research maintains Hold recommendation on Tat Hong Holdings (T03.SG) and $0.99 fair value estimate, despite negative impact of floods on some of the heavy machinery group’s business in Australia. 

It notes that floods are “a double-edged sword” for the group; some of Tat Hong’s business has been transferred to its head office and equipment moved to higher ground; stock vulnerable to impairment risks and “insurance claims may not fully cover damages resulting from the floods.” However, it says post-flood construction may boost demand for Tat Hong’s cranes. 

 

“We believe that Australia’s floods may be a near-term negative, but medium-term positive event for Tat Hong.” OCBC notes Australia accounts for 60% of Tat Hong’s group revenue but less than 5% of its cranes are located in flood-affected areas.

 

Stock is +1.1% at $0.955.