Yongnam

Yongnam: 3Q11 results slightly above expectations.
Net profit was $16.8m, +12% qoq, +23% yoy, a fresh quarterly record for Yongnam, underpinned by higher revenue (+7% yoy) and growing contributions of the group’s higher margin Specialist Civil Engg division (55% of revenue vs 2Q11: 48%; 3Q10: 37%). This lifted gross margins to 30.2%, +260bps yoy.

Yongnam secured $54m worth of contract wins between Sep-Oct 11, bringing ytd wins to about $290m. The group has secured civil engg contracts on two DTL3 stations (Kaki Bukit & Kallang Bahru; 16 stations in total), out of a total of six which have already been awarded. Yongnam ended the qtr with an order backlog of $480m.

Citi keeps at Buy but lowers TP to $0.31 from $0.36. Notes Yongnam’s stock price has been range bound btwn $0.21 - 0.32 since mid ’09, and with the current macro headwinds, believes it will be increasingly challenging for Yongnam to break out of the $0.30-0.32 resistance level over the next 12 mths. Nevertheless, the house sees strong support at $0.23.