Yongnam

Yongnam: Announced 2Q11 results which was in-line.
Rev at $82.5m, -1.9% yoy and +10.3% qoq, net profit at $15.1m, +12.9% yoy and +0.3% qoq.

Rev eased on slower-than-expected recognition. Slight yoy decrease in topline predictable, with substantial completion of remaining projects at MBS in FY10. Shift in rev mix towards specialist civil engineering continued, with segment accounting for 49% of grp rev in 2Q11.

Qtrly net profit was record, helped by better gross margins at 29.6% vs 29% yoy, and a lower cost structure. Contract wins picked up strongly, with grp already securing $193m worth of contracts in 2Q11 alone.

Going forward, grp remains positive of outlook, backed by strong order book and earnings visibility. Earnings visibility solid, back by order book of $509m, while net gearing improved to 0.45x vs 0.49x yoy. Grp is bidding for $1.2bn worth of projects this yr. Outlook underpinned by numerous opportunities in civil engineering space. Valuations remains compelling, with grp trading at 5.1x FY11E P/E vs SG peers average of 8.4x.