Tiong Seng Holdings' profits dip 5% to S$25.7m

But 2013 outlook still positive amid stronger orderbook.

According to DBS, Tiong Seng Holdings' profits from associates declined 55% y-oy to S$9.2m due to completion of various construction JV projects a year ago. Hence, net profit declined 5% to S$25.7m. 

DBS adds, the group also declared a final dividend of 1Sct per share (payout ratio of c.30% and consistent from a year ago), translating to a yield of 4%.

Here's more:

FY12 PATMI of S$25.7m (-5% y-o-y) is slightly ahead of expectations. Tiong Seng Holdings (TSNG) reported a 23% y-o-y increase in its top-line to S$511.4m for FY12.

This was largely due to higher recognition of construction revenues for ongoing projects (S$496.4m, +42%y-o-y) and higher sales of Cobiax, offsetting lower revenues from its property development division (S$3.3m, <94% yoy) with the tail-end sales of its completed projects – Wenchang Broadway and the Tianmen Jinwan building.

Profit from operations increased by 27% to S$21.3m with operating margins remaining stable at c.11%. 

Construction orderbook remains robust; investment in a pre-cast factory in Iskandar region. The outlook for the construction division – with a secured orderbook of S$1.3bn – is projected to remain a relatively consistent contributor over FY13-14F, when a majority of the revenues are to be recognised.

While management expects labour costs owing to the levies and tightening man-year entitlements to put pressure on margins in the next two years,  the impact is likely to be fairly marginal and lower than peers given the group’s focus in automation and technology  in its construction activities.

In addition, the group also acquired a site in Iskandar region to build another pre-cast factory. 

TSNG has begun construction for Phase 2/4 of Sunny Int’l project (83% sold out of 560 units) and is expected to recognise sales in the coming year.

Its other development projects in Dagang, Tianjin and Suzhou are in various stages of planning and development and will underpin the stronger earnings in the coming years.