SINGAPORE (May 17): With the award of various contracts Yongnam Holdings is gunning for delayed, CGS-CIMB Securities is pushing back the expected turnaround date of the civil engineering and structural steelwork specialist.
In 1Q18, Yongnam reported a net loss of $4.6 million on the back of 41% y-o-y lower revenue of $54 million after substantial completion of Senoko Food Hub and Jewel Changi Airport projects at end FY17.
Projects involving structural steelwork that contributed during the quarter include Outram Community Hospital and Evonik plant in Jurong Island, while $19.1 million in specialist civil engineering revenue came from Thomson-East Coast Line and the Hong Kong MTR.
As at end March, order book stood at $142 million with no major order wins since securing $22.9 million worth of contracts in Feb 18.
But with the absence of any North-South Corridor project awards as well as lack of progression in the pending Melbourne Metro project year-to-date, CGS-CIMB now expects a turnaround in 2H18.
“We believe Yongnam is well-positioned to undertake strut works for these projects and expect more order wins to come its way in 2H18,” says analyst Colin Tan in a Tuesday report.
Apart from the bids submitted for various contracts for the North South Corridor in Singapore, Yongnam is actively pursuing $1.1 billion worth of infrastructure and commercial projects in Australia, Hong Kong and the Middle East and management is hopeful that some of these projects could be awarded and commence in the later part of this year.
“Maintain ‘add’ with a lower target price of 56 cents, pegged to 0.8 times FY19 book value which is at 10% discount to its long-term average of 0.9 times,” says Tan.
As at 4.12pm, shares in Yongnam are trading at 31 cents or 23.2 times FY18 forecast earnings.
