Sim Lian

Sim Lian: Group announced good 2Q13 results, revenues up 64% y/y to $208m, profit up 35% to $47.5m. The increase was mainly due to the higher revenue contribution of $170m from Property Development. The Group has lower contruction revenues due to fewer projects in the quarter, with the segment contributing $31.7m, a decrease of 19% y/y. No dividends has been declared for 2Q13. However on the cost end, contract costs of $148m was 89% higher y/y due to higher labour and raw materials costs. Employee expense also increased 55% to $2.6m due to increase in bonus for 2012 and workforce numbers. Mgmt stated that the latest measures can be considered as the most severe and most encompassing from the government to date. Group will continue to be selective in replenishing its landbank, and will continue to keep a watchful eye on macro conditions, as well as continue to explore opportunities to acquire investment properties for recurring income. Sim Lian trades at 1.1x P/B, with historical dividend yield of 5.75%.