Tiong woon

Tiong woon: Register a robust set of FY13 results which was above estimates, as net profit came in at $17.6m versus a net loss of $4.8m y/y, driven by a 36% increase in revenue to $200.5m, as the group experienced a substantial improvement in revenue across most of its different business segments in particular, the heavy lift and haulage division (+35%) and the engineering services division (+121%) The Heavy Lift and Haulage division rose 35% to $154.4m, contributing 77% of revenue, mainly attributed to higher equipment utilisation rate and an increase in the number of heavy lift and installation projects undertaken by the Group in the region. The Engineering Services division’s turnover grew 121% to S$23.3m, due mainly due to higher percentage of completion of the Tuas New Yard Phase 1 project and the Tuaspring Desalination project. Similarly, the Trading division registered a strong 97% increase in turnover to $12.2m. Going forward, the Group expects business conditions to be challenging due to uncertainties in the world economy, higher labour and other operating costs. Singapore will continue to remain the key contributor due to sustained demand from public sector infrastructure projects. In ASEAN and the Middle East, the Group will focus on oil & gas and petrochemical, infrastructure development and construction opportunities. Overall, we note that given peer Tat Hong’s recent woes, investors could perharps see some rotation of funds into Tiong Woon. Lim & Tan also upgraded the counter to Buy on Friday, where the house expect a strong finish for 4Q13 thereby meeting streets expectations for abt $5m profit, vs a net loss of $5m last yr, reflecting the strong recovery of the O&G and petrochemical markets in SG, Middle East and Msia. Tiong Woon is also in the midst of increasing their capacity by another 20-25% over the next 2 yrs to meet demand and will benefit from SG plans to expand more MRT lines, build newers flats and infrastructure, as well as increased regional construction works.