CRANE on target and next year looks even better.
I just visited with CRANE (4.58) on a gloomy Friday -and have this upbeat short report
-- The company does “not see at all” any slowdown in the Thai economy.
They read the news like we, but don’t see it/feel it nor sense it. Not now, nor do they sense its coming.
-- The company is in advanced discussions with a strategic
partner (from Europe) which if this happens would create great new synergy and would
enhance the firms earnings into 2014.
If/when this happens a SET announcement will be made. I could not dwell on this as its not yet disclosed, but had a sense its
more then likely.
-- The company is sensitive to Baht fluctuations but their CFA
is very good at knowing and applying currency hedges and so he does not expect any
effect. He mentioned their CFA (which I met) is a
specialist in this but added if the Baht were to drop much further there could start to be some earnings affect as he is no sure if the hedge is perfect. The Thai currency already dropped of late due to all the bearish headline news which is exaggerated as many of us here think.
-- Their new 1250 ton crane (biggest in SE Asia) has been working (engaged) from the
first day it was imported -and is fully booked for months on forward.
-- The ZooMillion cranes from China (as you recall Crane is the exclusive
importer of these) are doing well and will very likely keep doing better as they now have 3
engineers from China to service them along with a leasing office which will
help clients lease their cranes. In the
past, servicing concerns with such equipment from China was the single biggest
drawback to selling these here. Its doing
well and even better because of: 1) good pricing, 2) increased service fleet,
Chinese engineers on location, 3) lease financing options becoming available.
-- There is a bit more competition yes, because it’s an attractive
and growing market here, but Japanese cranes
like TANADO are not the direct competitor as their cranes are far more
expensive and so target a very different market.
-- The wind energy industry is set to lift off in a big way (I
did not mention DEMCO), next year with now as he hears, even some Chinese
coming here to build such as well.
Nothing at all has changed on this from the upbeat comments he told me 2
months ago. “If anything its solidifying
To conclude chief operating officer (COO) told me if
anything things are better than when I visited them last in June and if this
strategic alliance happens it will lift the company further and they see no
slowdown at all in their business. The revenue target is 1.5 bill this year and if anything it will be better with next year looking comfortably further up.
I must say I was surprised by this upbeat assessment on a gloomy Friday afternoon, the good
articulation behind his comments and if
this new alliance happens as I sense it will, CRANE is a screaming buy at the
current price around 4.58!
Paul A. Renaud.