A tower crane is a musthave in the construction of any tall building as it facilitates the lifting of various construction materials like steel rods, concrete bricks, etc. from the ground to other parts of a building under construction. It is a modern form of balance crane. Fixed to the ground (or “jacked up” and supported by the structure as the structure is being built), tower cranes often give the best combination of height and lifting capacity. To save space and to provide stability, the vertical part of the crane is often braced onto the completed structure which is normally the concrete lift shaft in the center of the building.

Yongmao Holdings (YH), which will start trading on the main board on the last day of the Lunar New Year (Feb 21), designs and manufactures a wide range of tower cranes, components and accessories.

YH’s tower cranes are sold mainly to construction equipment distributors and equipment rental companies in overseas markets and to construction companies and equipment rental companies in China. Its tower cranes are sold in China and exported to many countries like US, Panama, Zambia, South Africa, United Arab Emirates, Saudi Arabia, Bahrain, Belgium,United Kingdom, Ukraine, Hong Kong, Macau, Singapore, Indonesia, Thailand, South Korea and India.

YH’s tower cranes have been used in many prominent projects in China and overseas.

FAST LEAD TIME

The company manufactures its tower cranes in Fushun City, Liaoning Province, China, which occupies a land area of 160,000 sqm. Upon receiving a customer’s confirmed order or down payment, YH is generally able to deliver a tower crane within 60 to 180 days.

Interesting to note, Tat Hong Holdings, which rents and sells cranes and spare parts for cranes, owns 70m shares in YH. Tat Hong will see its 21.1% stake in YH dilute to 15.8% after the invitation. YH is also using Tat Hong’s office at 18 Sungei Kadut Avenue as its registered address in Singapore. Ng San Tiong, TatHong’s CEO, is also the deputy chairman of YH. YH is offering 111.55m new shares in its IPO where 3.8m shares are for the public while the remaining 107.75m shares are for placement.

At $0.35, YH is priced at a price earnings ratio (PER) of 9.9 times based on its FY07 earnings. This compares favorably with Tat Hong which was recently traded at $3.09 (PER of 19.5 times).

EXPANDING MANUFACTURING CAPACITY

Net proceeds of $35.4m would be used to construct a new manufacturing facility ($21.7m), acquire plant and machinery ($9.9m) and fund working capital ($3.8m).

YH’s prospects include the large influx of direct foreign investment plus China’s strong economic growth leading to increased construction activities.

The company has strong emphasis on product development and will continue to focus on developing new products and improve upon its existing products. Its fifth series of tower cranes - the crawler cranes - is expected to commence production around the end of 2008. YH will also seek to increase its customer base in existing and new markets.