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The Place Holdings is sector winner; BRC Asia and Kimly top earnings growth and ROE respectively

The Edge Singapore
The Edge Singapore • 4 min read
The Place Holdings is sector winner; BRC Asia and Kimly top earnings growth and ROE respectively
The three companies that won in the cyclical consumer services sector are a rather diversified bunch.
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The three companies that won in this industry sector are a rather diversified bunch. The Place Holdings came out tops for the returns to shareholders category as well as the overall sector winner. Led by CEO Fan Xianyong, the company operates via three business “pillars”: property development and property management activities; cultural tourism with “new retail” business concept and last but not least, integrated media-related businesses with management & operation rights.

In FY2020 ended last December, revenue came in solely from its integrated media-related business unit, which was affected by the Covid-19 pandemic as there were fewer marketing activities and branding events by customers. However, its gross profit margin increased by 7 percentage points to 95% in FY2020 as the provision of management services segment commanded a higher profit margin. As such, it reported earnings of $684,000 in FY2020, from a restated number of $80,000 for FY2019.

Nevertheless, some investors are already betting on the company’s growth prospects. In the three-year period taken into consideration, The Place Holdings’ share price grew at a compounded annual growth rate of 52.4%, earning it the top spot in this particular industry sector.

Order visibility

BRC Asia, which was one of the winners in the BDC last year, is back again. This time around, the steel player was named tops for growth in profit after tax category in this sector. Between FY2016 and FY2019, the company’s earnings jumped from $2.1 million to $20.4 million, which translates into a compounded annual growth rate of 112.6%. This growth pace makes it the winner of this category of this sector.

For the nine months ended June 30 2021, BRC Asia’s earnings were up 46% y-o-y. It has an outstanding order book of $1.1 billion as of June 30. The company is careful to warn that the resource and labour crunch, because of the pandemic, has brought new challenges for the local construction sector and recovery may not be seen in the short run. “In the longer run, this pandemic may also have seeded certain substantial structural changes to how the sector operates,” says CEO Seah Kiin Peng.

See also: The Place Holdings to dispose 1.5% stake in The Place Yuntai Investment for $4.3 mil

On Aug 28, Hong Leong Asia (HLA) announced plans to invest $68.1 million to bring its total interest in BRC Asia to 20%. HLA’s concrete and BRC’s steel will have synergy in so-called Prefabricated Prefinished Volumetric Construction (PPVC) building technology.

The acquisition will be in two parts. First, HLA will subscribe for 31.015 million new BRC Asia placement shares at $1.48 each, for a total of $45.9 million. HLA will also pay five existing BRC shareholders $22.2 million for their 15 million shares, also at $1.48 each. “We strongly believe that HLA’s support will enhance the growth of our group, particularly in our quest to expand internationally,” says Seah.

Meanwhile, coffee shop chain operator Kimly is featured among the BDC winners for the first time. It has been named top in weighted ROE for this industry sector. For FY2017, FY2018 and FY2019, its ROE for the year was 27.83%, 23.39% and 25.47%, giving it an overall 25.32% weighted ROE for the three-year-period under consideration for this year’s BDC.

With most of its outlets in the housing estates, Kimly is a beneficiary of the work-fromhome trend after the pandemic reared its ugly head. For the half year ended March 31, the company’s total revenue increased by 14.2% y-o-y to $122.7 million. Yet, earnings in the same period surged by 106.2% y-o-y to hit $21.7 million.

“The strategic locations of the group’s food outlets in the HDB heartlands that span across Singapore, provides the group with a competitive advantage to serve an increased footfall arising from the people working from home and dining-in at the F&B establishments,” notes the company in its earnings commentary.

The company is also actively acquiring new businesses that will help diversify its overall revenue stream, which includes taking up stakes in existing established brands. As of May, Kimly operates 83 food outlets, up 29.7% since its IPO in 2017.

Photo: Samuel Isaac Chua/The Edge Singapore

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