SHHM net profit up 14.6% as trading activity spiked

Trading grew 85% regionwide.

Sing Heng Heavy Machinery (SHHM) reported 1Q14 net profit attributable to shareholders of S$3.79 million. Net profit was higher 14.6% y-y, but lower q-q by 11.2% from a high base, according to a research report from PhillipCapital.

Rental gross profit dropped slightly by 14.8% due to completion of certain projects, but trading grew by 85.0% y-y based on activity in all regions, said the research firm.

Management is cautiously optimistic as infrastructure activity in Singapore should pick up by FY14 end while they continue to drive business in their growth regions of Malaysia, Vietnam and Myanmar, it added.

PhillipCapital said SHHM continues to make an "excellent investment for patient investors looking for longer term gains with limited downside."

"We continue to be positive as they managed y-y net profit improvement despite delays in certain projects in Singapore. The healthy trading contribution offsetting the slight rental decline this quarter increases the probability of mid single digit growth for FY14 as rental activity in Singapore should pick up closer to end FY14," said PhillipCapital.

"We expect cautious growth of rental capacities and trading networks for FY14-15, with additional potential upside surprises if materialization of planned third world region projects to bid on occur in FY15 onward," it added.