2012

2013

2014

2015

2016

1H17

Net profit attributable to shareholders

$25.7m  

$9.3m

($15.3 m)

$10.2 m

$15.3m

$14.3 m


This year is shaping up to be the best in five years for construction company Tiong Seng Holdings.


Stock price 

32 c

52-week range

21 – 38 c

PE (ttm)

6.8

Market cap

S$144.4 m

Shares outstanding

451.4 m

Dividend
yield (ttm)

2.5%

Year-to-date return

42%

Source: Bloomberg

Its 1H2017 net profit of $14.3 million is only a whisker away from the $15.3 million achieved for the entire 2016 -- and exceeds the performance of the full years 2013, 2014 and 2015.

Not surprisingly, its stock price (32 cents) is up 42% in the year to date. And the company has bought back 2.61 million of its shares so far this year.

LG 5.13Pek Lian Guan, CEO, Tiong Seng Holdings. NextInsight file photo

 

 S$’000

2Q17

2Q16

Change %

Revenue

219,749  

158,024

37.2

Net profit attributable to shareholders

10,203

4,473

128.1

Its 2Q performance, announced last week, showed that the construction segment continued to be the star contributor.

Its revenue surged 36.5% to S$399.6 million as it entered into a ramp-up phase for various projects.

 S$’000

1H17

2H16

Change %

Revenue

424,440  

405,205

4.7

Net profit attributable to shareholders

14,293

8,210

74.1

Segment profit for construction was $22.5 million while it was a loss of $1.6 million for the property development segment, largely on a fall in revenue recognition (S$23.8 million versus $111.7 million in 1H2016).

Major business segments

 

1H2017
(S$‘000)

1H2016
(S$‘000)

Change (%)

Construction contracts

Revenue

399,637

292,708

36.5

Operating profit

22,514

13,932

61.6

Sale of Development Properties

Revenue

23,839

111,645

(78.6)

Operating profit/(loss)

(1,636)

5,972

n.m.


KenChoo t6.2016Ken Choo, CFO of Tiong Seng. NextInsight file photoOperating cash flow in 1H17 was strong at S$53.3 million, enabling Tiong Seng to repay a whopping $50.2 million in borrowings in 1H17.

This reduced its total borrowings to $126 million, the lowest level in at least the past five years. 

Its gearing ratio continued to improve to 0.40 (31 Dec 2016: 0.55). 

Risk: Tiong Seng's construction orderbook has dropped from $1.3 billion in June 2016 to $1.0 billion at the start of 2017 to $730 million at end-June 2017. 

Its strategy:

♦ The creation of a civil engineering unit to target infrastructure projects.

♦ Maintain its leadership position in the industry by consistently investing in construction technologies.

♦ Tapping on increased government legislation for more labour-saving technologies.

In the property development segment, $117.2 million of gross development value were sold but yet to be recognised as revenue, as at end-June 2017.

Buying sentiment in China -- where the bulk of Tiong Seng's development projects are located -- remains robust but the government continues to apply cooling measures to moderate property prices in China.

In Singapore, Tiong Seng expects to complete its development project, Goodwood Grand in Balmoral Road, by end-2017. 

It has recently acquired two freehold sites in Jervois Road, in the prime district 10, to redevelop into residential units.


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