May 16, 2014

Yongnam's Weak Erection Activities and Net Loss for the First Quarter


Overview

16/5/2014 closing price: $0.235 -4.08%, XD of $0.006/share

Revenue down due to business slowdown and lower margin projects. Overheads cost increased while staff expenses decreased.


Secured orders for 1Q14 at S$54.3 million with total order book of S$316 million.



Revenue



1Q14: Revenue decreased 12.4% to S$71.8 million (vs. 1Q13). 


Specialist Civil Engineering revenue decreased 22.1% y-o-y to S$28.5 million in 1Q14 (vs. S$36.5 million in 1Q13).


Structural Steelworks revenue decreased 4.5% to S$43.3 million in 1Q14 (vs. S$45.4 million in 1Q13).


Staff expenses decreased by 28.7% to S$4.4 million

Earnings and Dividends


1Q14: Net loss after tax of S$1.9 million (vs. net profit of S$11.5 million 1Q13). Contributions from ongoing projects in 1Q14 were lower than projects that had higher margin in 1Q13. 

Higher fixed production and project overheads due to lower fabrication and erection activities contributed to the net loss.



CEO comment: Gross margin from ongoing projects are expected to come down to normal industry-level.


Gross profit margin: 4.1%


Dividend of $0.006/share for FY13





Balance Sheet 

1Q14: Higher bank borrowings increased bank interest and charges to S$1.3 million from S$0.7 million.


Net gearing slightly increased to 0.55 times compared to 0.53 times q-o-q.





Valuation

1Q14: NAV 24.79 cents




Potential Catalysts
1. Potential contract wins from Singapore, Hong Kong, Macau and the Middle East (only from 2H14).

2. Hanthawaddy Airport













Disclaimer: I have vested interests in Yongnam but don't listen to me, I am just a clueless punter. 

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