1
Corporate UpdateOctober 6, 2009
2
Maintain focus on transforming Tat Hong into a
“rental” company:
Lessons learnt from previous downturn
Increasing rental demand from customers to minimise
their risk associated with equipment purchase in view of
uncertain outlook
Increase exposure to government infrastructure projects
in the region
Resiliency of rental revenues and profits relative to
distribution business
Accelerate transformation by growing tower crane rental
business in China
Execution on track
Strategies and Plans for Growth
2
3
Revenue by Business Activity
FY2009FY2007
55.0%
($265.4m)
36.8%
($177.8 m)
Equipment
SalesCrane &
General
Equipment
Rental
Parts and
Services
50.9%
($321.8m)
8.8%
($55.4 m)
40.3%
($254.5 m)
8.2%
($39.3m)
Full Year Ended March 31
4
Gross Profit by Business Activity
FY2009FY2007
29.7%
($44.3m)
56.8%
($84.7m)68.5%
($165.1m)
13.4%
($32.4m)
18.1%
($43.7m)
13.5%
($20.2m)
Full Year Ended March 31
Target contribution
from rental operations
to exceed 75%
Equipment
SalesCrane &
General
Equipment
Rental
Parts and
Services
3
5
Become the leading and dominant tower crane rental group
in China through M&A & organic growth
Active exploration of value-accretive M&As of tower crane
rental companies in major first and second tier cities in China:
Announced in August 2009 a JV with a leading tower crane rental
company Guangzhou Hailin to form Sichuan Tat Hong Yuan Zheng
Machinery Construction Co., Ltd. Completion expected in
November 2009
Various stages of negotiation with major rental companies in
Beijing, Dalian, Shenzhen, Tianjing & Zhejiang
Aggressively grow to at least 3 times current fleet size in 2
years
Plans to increase higher-tonnage fleet size more aggressively than
mid-sized fleet
Execution on Track
Strategies and Plans for Growth
6
Expansion beyond traditional markets
Singapore and Australia already established as strong
pillars of growth
Company’s growth opportunities lies in establishing
strong business connections and networks in China as
well as gaining experience in other parts of Asia to
expand beyond its traditional markets
Strategies and Plans for Growth
4
Update on Tower
Crane Segment
8
FY2008 FY2009 Q1'10
8.9
24.7
8.0
0
5
10
15
20
25
Fastest-growing Contributor
Revenues currently derived from 2 major operating subsidiaries:
China Nuclear Huaxing Tat Hong – 210 units
Jiangsu Zhenghe Tat Hong – 110 units
Rapid expansion of tower crane rental fleet since formation in FY2008
Utilisation rates holding steady with major customers in infrastructural
development sector (nuclear power generation, railway stations, stadiums,
etc)
S$ millionTower Crane Rental Revenues
5
9
Growing Tower Crane Fleet
Tower Crane Fleet Profile
Size
(Tonnes-Metres)
No. of Cranes
Available
(as at March 31, 2008)
No. of Cranes
Available
(as at March 31, 2009)
No. of Cranes
Available
(as at June 30, 2009)
< 99 TM 83 76 88
100 – 199 TM 49 64 84
200 – 299 TM 58 105 122
> 300 TM 20 14 16
Others 6 3 4
Total Units 216 262 314
Total Tonnage-
Metres
35.462 49,040 56,045
Overall
Utilisation Rate
88%(estimated figure with less than
6 months’ data available)
73.3% 74.7%
10
Spending on Infrastructural Development in
China still Strong
“Asia’s giant has gotten down to business on the infrastructure
spending plan and as a result the activity in China’s infrastructure
sector has been one of the highest globally..In BMI’s Q209 China
Infrastructure Report we maintain our forecasted growth levels for
2009 and 2010 at 7%... For 2009 BMI forecasts that the industry
value will be CNY1,770bn and will rise to CNY1,882bn in 2010.”
(Source: Business Monitor International, Q2 2009)
Infrastructure investment is at the heart of China’s stimulus, with
investment in railways, highways, airports, power grids, rural
infrastructure and disaster reconstruction (excluding construction of
buildings) estimated at RMB2.6 trillion or 65% of overall
investment …going by the 11th Five Year Plan, roads, rail and power
generation, power transmission and generation appear to be priorities.
(Source: “Asian Infrastructure”, CLSA reasearch report, April 2009)
Market Prospects
6
11
Demand for Tower Cranes remains healthy
“…Large-scale governmental infrastructure programmes and
prestigious projects like Expo 2010 in Shanghai still provide healthy
demand, especially for large capacity tower cranes. With enhanced
emphasis on environmental protection, the generators of modern coal-
fired power plants get larger and more complex…and require cranes
with capacities of 80t-120t.” (Source: Cranes Today, March 9, 2009)
“Construction companies are increasingly turning to rental after
finding that the cranes that they bought to win a project are idle once it
has finished…In recent years, the Chinese government has invested
more in wind power construction, so wind turbine lifts are a big driver
of demand for large cranes.” (Source: Cranes Today, December 8,
2008)
Market Prospects
12
Entry of Strategic Investor
Investment agreement with AIF Capital III Shipping & Logistics
Limited signed on August 3, 2009
Issuance of 65 million convertible redeemable preference
shares (CRPS) at an Issue Price of S$1.00 per CRPS approved
Upon full conversion into ordinary shares, this will represent
approximately 11.41% of Tat Hong’s enlarged and issued paid-up
capital (1)
80% of the net proceeds of approximately S$63.5 million will be
used to fund the Group’s expansion in Australia and China;
balance for working capital
Balance sheet strengthened – net gearing will be reduced from
0.57 times to 0.35 times upon issuance
Nominee Andy Tse, MD of AIF Capital, to be appointed onto Tat
Hong Holdings’ Board
(1) As at October 5, 2009
7
About AIF CapitalAndy Tse
Managing Director
14
Established in 1994
One of the largest Asia-based independent private equity firms; success spans nine countries, 33 investments
Manage in excess of US$1.5 billion;
Investors in its funds include:
Governments and government-linked entities (including Singapore)
insurance companies and major corporate and government pension funds from North America, Australia, Asia and the Middle East and Europe, and
multilateral agencies such as International Finance Corporation of the World Bank Group, Commonwealth Development Corporation of the UK, and The Asian Development Bank.
Pan-Asian Private Equity Fund
8
15
Regional Presence
16
Investment Focus
Focused on companies that would benefit from:
Asia’s rising domestic consumption
Asian government spending on infrastructural
projects
Integrating into the global supply chain
9
17
Board Level
Participation
Recruiting and development of management talent
Structuring and implementation of incentive compensation schemes
Development of budgets and long-term strategic plans
Development and execution of financing strategies
Corporate
Governance and
Monitoring
Implement best practices
Ensure transparency and accountability
Reporting and monitoring systems
Financial
Improvements
Strengthening financial oversight
Advising on debt and equity financing
Driving Growth Introducing new markets and potential strategic partners
Value Creation
18
Current Portfolio in Singapore
Olam International Limited
(in S$ mil) 6/2002 6/2009
Revenue 1,588.5 8,726.4
PAT 25.0 252.0
Oceanus Group Limited
(in RMB mil) 12/2008 6/2009
Revenue 319 138.5
PAT 193.5 187.2
10
19
Greater China
AMH Media Holdings Limited
Charm Communications Incorporation
CN Innovations Holdings Limited
Hailing Pharmaceutical Company Limited
Meiya Power Company Limited
CSX World Terminals
India
Bharti Infratel
BioPlus
Catholic Syrian Bank
Yes Bank Limited
Bharti Airtel
GVK Industries
Rest of Asia
Seah Besteel
PT Excelcomindo
TelecomAsia
Orascom Telecom
Holdings Ltd
Selected Portfolio Outside Singapore
20
Intravenous
Pack
Injectable
Drugs
Capsules
and tablets
11
21
Energy
Transport
Manufacturing
Media
Pharmaceuticals
Aquaculture
national Telecom
Investments in China
GUANGXI
JIANGSU
HUBEI
HEBEI
HUNAN
SICHUAN
GUANGDONG
ZHEJIANG
FUJIAN
TAIWAN
BEIJING
TIANJIN
GANSUSHANDONG
HAINAN
YUNNAN
Since 1994 AIF Capital has invested in 14 multi-asset platform
investments in toll roads, energy, ports, engineering,
manufacturing, pharmaceuticals, aquaculture and
media.
22
One of the largest Asian players in equipment
distribution and rental businesses
Resilient and proven business model
Experience in sailing through storms and crises
Excellent management
Strong and highly regarded independent board
Synergy with core focus of AIF – emerging Asia
Industry at a inflection point for high growth
Why Tat Hong?
12
Thank You
24
Infrastructural/Oil & Gas Projects
ASEAN & HK
Recently Completed Projects Sentosa IR
Shell ECC in Pulau Ular
Circle Line (MRT)
Sentosa Link Bridge
Lucite Alpha 1 in Jurong Island
Palm Jumeriah Monorail in Dubai
Shadeed Dri Plant in Oman
Ongoing Projects Exxon Mobil - Singapore Parallel
Train in Jurong Island
Marina Coastal Expressway (MCE)
Marina Bay Sand IR
Downtown Line Stage 1 (MRT)
Marina Bay Front
Cantho Bridge in Vietnam
Melaka PSR2 project in Malaysia
Australia
Gorgon Island oil & gas projects
Adelaide desalination plant
Liquefied Natural Gas project, North West Shelf, WA
High-grade iron ore mine expansion project, WA
Cape Preston power stations, WA
China
Dalian Red riverbank nuclear
power station
Xiamen underground west station
Jinan West railway station
Jinglu elevated railway station
Top Related