Hock Lian Seng

Hock Lian Seng: Announced FY11 results which saw a strong bottom-line, despite top-line coming in weaker. FY11 Rev at $163.7m, -28.6% yoy, while net profit at $31.1m, +15.1% yoy. Gross Margins surged to 24.9% vs 13.1% yoy. Grp has proposed a 2c dividend.

Rev decrease was largely from the civil engineering on lower progress billing recognised due to completion of the Marina Bay Station project. Reve from building material segment declined $3.9m to $3.0m due to the absence of new orders since its completion of the existing contract since June 2011. The Group’s other revenue segment which refers to rental revenue from the workers’ dormitory, has increased by $7.7m yoy to $8.3m.

Strong gross margin was largely due to the revision of cost estimates from its near completion civil engineering project. Going forward, grp note that despite the challenging mkt conditions, business has remained profitable and grp will continue to tender for more infrastructure projects while keeping a look out for opportunities in the area of ppty dev.

We note that overall, grp fundamentals remain strong with an orderbook of $227m, underpinning earnings visibility till 2013, while Grp has a whopping net cash position of $177.5m, or 0.34c/share, representing a 139% premium of share price/cash. In simple terms, any investor in this Co. would technically be getting more then what their share price is worth based purely on Co’s cash position. Div payout of 2c/share brings FY11 yield to 8% yield.