Tiong Woon

Tiong Woon: UOB Kay Hian initiated on Tiong Woon, rating the undervalued service provider to the O&G industry with a Buy and TP of $0.455. Tiong Woon derives 70-80% of its revenue from the O&G industry, earnings are relatively more resilient in nature as these service contracts are longer term in nature and can be recurring. Safety issues pertaining to the O&G industry also create high barriers to entry to the industry. While the resale value depends on current market conditions, Tiong Woon has typically been able to resell its equipment above book value. In the last five FYs, UOB Kay Hian noted that Tiong Woon was able to record strong gains from the disposal of property, plant and equipment (PPE) of about 29-274% in excess of its book value, suggesting the possible understatement in fair value of PPE in its balance sheet. Tiong Woon is trading at 0.64x P/B, 23% discount to its local peers’ average P/B of 0.83x. The depressed valuation offers investors a high margin of safety.