How Tat Hong may have suffered from A$ translation effects

Earnings forecast slashed by 2-4%.

According to CIMB, it conservatively lowers its FY14-16 EPS by 2-4% for lower Australian contributions from A$ weakness.

Here's more:

What Happened
The broader market has pulled back from its May high and TAT has not been spared, retreating 20% in the last one month. As there have been no operational hiccups at the company, market sentiment and the overhang from AIF’s voluntary conversioncould be the culprits, in our opinion.

What We Think
The slight negative aspect of its operations, if any, is currency-related via translation effects. Yet, we believe the dent on FY14-15 numbers will only be 2.5-4%, at the most, after speaking with management.

This is not surprising, as in recent quarters, higher revenue contributions had been flowing in from Singapore and other ASEAN markets, at the expense of Australia. Contributions from Australia have been generally affected by weaker demand in the mining sector this year.

We are sticking to our view that near-term earnings will increasingly be spurred by Singapore and other ASEAN markets (Thomson Line construction in Singapore in 2H13, rail projects in Malaysia andThailand) and Hong Kong.

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