Background: TA Corporation is engaged in the
construction business and real estate development,
and debuted on the Singapore Exchange last
November with an IPO price of $0.28. It has been in
the construction industry for around 40 years and
holds the highest grading of A1 by the Building and
Construction Authority of Singapore. In 2005, the
group forayed into property development in China and
Cambodia through joint ventures with local partners.
Recent development: TA Corp’s first set of results was slightly disappointing, owing to IPO-related expenses and the absence of one-off gains as in 2010. Revenue was up 17.2% YoY to $284.7m, with higher contributions from the real estate development division. Excluding one-off costs, net profit would have risen by 6% YoY.
Recent development: TA Corp’s first set of results was slightly disappointing, owing to IPO-related expenses and the absence of one-off gains as in 2010. Revenue was up 17.2% YoY to $284.7m, with higher contributions from the real estate development division. Excluding one-off costs, net profit would have risen by 6% YoY.
Healthy construction orderbook. For its
construction business, TA Corp has secured contracts
for two projects from Allgreen Properties for $271m.
Its construction orderbook currently stands at $587m,
to be recognised over the next 34 m onths. For its
property development business, it has three ongoing
projects, ie, Parc Seabreeze, Auralis and Coralis. We
estimate that the pre-tax margins for Parc Seabreeze
and Coralis would be particularly high at over 30%.
This was because the land was acquired through en-
bloc sales and priced at around $450 psf ppr. The
group has proactively replenished its landbank. Its
most recent bid was for the Punggol EC land parcel,
but the bid was sixth in line and 10% lower than the
top bid.
Bumper yield. For FY11, TA Corp doubled its dividend payout, keeping its promise to shareholders. The payout translates to a y ield of 5%. While the company does not have a fixed dividend policy, it has committed to paying out at least 10% of its earnings for FY12.
Depressed valuations across the sector. The stock is trading at FY11 0.67x P/BV and 3.2x PER. Foreign worker levy and the rollout of property cooling measures may have depressed valuations in the construction and property development sectors.
Bumper yield. For FY11, TA Corp doubled its dividend payout, keeping its promise to shareholders. The payout translates to a y ield of 5%. While the company does not have a fixed dividend policy, it has committed to paying out at least 10% of its earnings for FY12.
Depressed valuations across the sector. The stock is trading at FY11 0.67x P/BV and 3.2x PER. Foreign worker levy and the rollout of property cooling measures may have depressed valuations in the construction and property development sectors.
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