Yongnam

Yongnam: to lift halt at 10am. Reports 2Q11 results in line with mgt expectations.
Revenue at $82.5m, -2% yoy, +10% qoq, with the Marina Coastal Expressway, MRT Downtown Line 2, HK MTR and the New Doha Int’l Airport projects contributing to revenue from Specialist Civil Engineering (+17.7% yoy to $40m), and on-going projects like Vista Xchange at One-North, Gardens by the Bay, Int’l Cruise Terminal and Mumbai Int’l Airport contributing to Structural Steelworks revenue (-15.2% yoy to $42.5m due to ubstantial completion of the remaining projects at MBS Integrated Resort).

Net profit at $15.1m, +13% yoy, flat qoq, as gross margins expanded to 19.6% from 29% yoy, due to the increase in higher margin Specialist Civil Engineering projects,

Mgt notes prospects for the Group continue to be promising. In 2Q11, the Group secured 4 new projects, comprising a $75 million structural steelworks contract for the Spore Sports Hub, a $19m contract for the new National University Hospital Medical Centre, a $50m for the National Art Gallery and a $49m specialised civil engineering contract for the HK Section of the Express Rail Link. In addition, there is a healthy pipeline of potential infrastructural projects in Singapore, including the MRT Downtown Line 3 as well as other commercial projects. Overseas, the Group is pursuing infrastructural projects like MRT projects in addition to commercial projects in HK, Msia, India, Indonesia and Saudi Arabia.

Yongnam’s order book remained strong at $509m, compared to $410m at end 1Q11. Mgt is optimistic that it will perform well in FY11.

Stock trades at 5.1x annualized 1H11 P/E, 1.2x P/B, based on $0.245 at last close.