Sin Heng

Sin Heng: 4QFY14 net profit fell 21.4% to $3.4m taking FY14 net profit to $13.8m (+0.3%). Revenue declined 4.7% to $59.0m, due to lower contributions from both the equipment rental and trading business, which both fell 6.1% to $12.8m and 4.2% to $46.2m respectively. Weakness in the equipment rental segment was attributable to the completion of several major projects in the previous quarters and pending the start of new projects, while the fortunes of the trading business is largely tied to the volume and tonnage of equipment sold. Gross margin rose to 15.5% from 13.9%, led by improved margin from the Equipment Rental Business as a result of lower repair and maintenance costs incurred during the quarter, although this was offset by lower margin from the Trading Business due to lower trading revenue recorded. Bottom-line was largely impacted by a 63.2% decline in other operating income to $1.0m, due to lower spare part sales, and the absence of income from forfeited deposits received in the previous year. This was offset partly by a 21.1% drop in admin expenses to $4.0m as a result of lower staff costs. Sin Heng is cautiously optimistic that the key markets which it operates in remains encouraging. The group has declared a first and final dividend of 0.65¢ per share (FY13: 0.45¢). At the current price, Sin Heng trades at 8.3x FY14 P/E and 0.92x P/B.