seehoe_philliptan9.12
Above: Philip Tan (left), who heads Teho's HVAC arm, is with Group CEO Lim See Hoe. Teho's 1HFY2013 revenue rose 24.9% year-on-year to S$21.8m, boosted by its foray into the distribution of heating, ventilation & airconditioning (HVAC) equipment for the offshore sector. 
NextInsight file photo

TEHO INTERNATIONAL is paying its first ever interim dividend after its newly-acquired subsidiary, Teho Engineering, boosted Group revenue and gross margins in the first half of FY2013.

It will pay an interim dividend of 0.4 cent per share for 1HFY2013 (Jul to Dec 2012) on 1 March (ex date is next Monday, 18 Feb).

In the past 3 financial years -- 2012, 2011 and 2010 - Teho has paid a 0.8 cent final dividend each.

250_Phua-Sian_Chin
Group CFO Phua Sian Chin. Photo by Sim Kih

If it pays the same final dividend again for FY2013, the total dividend would be 0.4 + 0.8, or 1.2 cents a share, translating into an excellent 7.5% yield on the recent stock price of 16 cents.

Conservatively, chances are that the company would not be maintaining the final dividend at 0.8 cent a share now that it has declared an interim.

Aside from what looks like a decent dividend yield, Teho stock currently trades at a sharp 34.4% discount to its 24.40 cent Net Asset Value per share.


1H results boosted by Teho Engineering

For 1HFY2013, the Group posted a 24.9% year-on-year increase in turnover to S$21.8 million and 5.3% growth in net profit to S$1.8 million for 1H2013.

Gross profit increased by 30.5% to S$7.3 million and gross profit margin improved from 32.1% in HY2012 to 33.5% in HY2013.

Formerly known as Finessco Systems, Teho Engineering was the key contributor to Group growth turnover, gross profit and gross margins after it was acquired in May 2012 for S$6.4 million.

Teho Engineering contributed 19.1% to Group turnover in 1HFY2013 and 28.8% of Group gross profit.

Its performance was driven by the strong order books of offshore projects in Singapore and in regional shipyards.

Teho Engineering is Teho's first acquisition after Teho was listed in June 2009. 

Teho is a regional leader in the supply of rigging and mooring safety equipment for marine and offshore applications, but this core business had been challenged by the global economic uncertainty and a shipping slowdown that has yet to recover.

Prior to the acquisition, marine clients accounted for 75% of Teho’s sales (FY2011).

In contrast, most of Teho Engineering’s revenue comes from offshore players like Keppel Corp, Sembcorp Marine and Viking Offshore.

“The acquisition of Teho Engineering allows us to secure orders in the higher margin offshore oil and gas segment,” said Teho CEO, Mr Lim See Hoe.

"The acquisition puts us in a better position for earnings growth," added CFO, Mr Phua Sian Chin.

With the acquisition of Teho Engineering, Teho has enhanced its scope of products and services to include the supply of the following:

(i) Electric heating and associated control systems and accessories in Singapore;
(ii) Marine and offshore oil and gas fire/shut off dampers, storm louvers and galley hoods in Singapore;
(iii) Marine water heaters in Singapore, Malaysia, Indonesia, Vietnam and China. 

2013-Feb-14---price
No thanks to its market cap of only S$18.5m, Teho's stock price (16 cents) has yet to recover from its recent decline in spite of its improved dividend prospects. Bloomberg data

 



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