Yongnam

Yongnam: Weak set of 3Q12 results, which saw net profit dived 38.7% yoy to $10.31m. The fall came on the back of a 17.1% fall in group rev to $71.71m, which group attributes to the substantial completion of some of its structural steelworks projects at the end of 2011 and slower progress in certain ongoing projects. CIMB note that drop in rev did not come as a surprise due to lower contributions from its structural steelworks (SS) division in 3Q12 following the completion of the higher-margin iconic projects last year. That said, Yongnam continued to book decent contributions from its specialist civil engineering to narrow the revenue decline. Current order book of $442m is still strong as the group secured $38.5m worth of contracts in 3Q alone, coupled with another S$27m in new job wins announced earlier this month. In addition, it is exploring opportunities to complement its existing business, and is looking into possible tie-ups with EU partners to work on wind turbine foundations. Overall, house maintains Buy with $0.33 TP. House reducing FY12 EPS because of new revenue and margin assumptions that are largely due to the timing of revenue recognition. Yongnam should be able to meet house revised FY12 forecast as previously delayed projects get ramped up going into 4Q12 and 1Q13.