Kim Eng on 13 Apr 2012
Background: Tiong Woon is an integrated infrastructure service provider with operations in Southeast Asia, China, India and the Middle East. It is also one of the largest crane-owning companies in the world. Its four business segments are Heavy Lift and Haulage (majority of revenue), Marine Transportation, Fabrication and Engineering, and Trading. The company was listed in 1999.
Recent rights issue: Tiong Woon recently completed a 1-for-4 rights issue at S$0.11 per share, which raised about S$10m to support working capital and capex requirements for the business.
Contracted for Tuas desalination plant. Though all the attention was on Hyflux last month for winning the S$890m Tuaspring Desalination Plant project in Singapore, Tiong Woon’s gain as an indirect beneficiary did not go unnoticed. It won a one-year project with Hyflux for associated pipeline works, which should boost its topline for CY2012.
Myanmar opportunities. Riding on the expected boom in Myanmar, Tiong Woon plans to set up a representative office there to prospect for new businesses. This is particularly pertinent after it won a maiden contract with an India-based conglomerate for an infrastructure project in the country in November last year. The contract will see Tiong Woon supplying cranes and providing marine transportation services. This is a good example of the company leveraging on its various capabilities to win projects.
Bottomline still not coming through. In line with the larger project flows, revenue has recovered substantially by 36% in 1HFY Jun12, but the bottomline remains weak. If the company is able to execute more cost-efficiently, as per its stated aim going forward, there may be deep value, with the stock trading at just 0.6x P/BV, considerably lower than its peers.
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