Yongmao

Yongmao: 3QFY14 net profit spiked up 491.4% y/y to Rmb12.3m while revenue climbed 8.9% to Rmb198.5m mainly from improvement in Asia (outside the PRC) and USA & Europe sales by 38% and 565% respectively from stronger demand. This was offset by lower sales from China (-12%) on lower demand. Gross margins improved from 24.8% to 32.9% mainly due to higher sales of the higher margin luffing series towercranes. While expenses increased overall, the aforementioned lifted the towercrane manufacturer’s bottomline significantly. Management expects greater demand for towercranes in SEA, especially markets like Malaysia and new markets like Myanmar to improve on increased construction activities. Export demand to US and European countries is also likely to improve in tandem with their economies. To mitigate margin pressures due to appreciating CNY, price adjustments may be possible. NAV as at end Dec was Rmb1.1689, translating to a P/B of ~0.8x