KING WAN: Target price 43 cents based on expected 7% yield

Chua Eng Eng, MD of King Wan Corp. Photo: CompanyKing Wan (KWAN SP) secured four mechanical and electrical projects in Singapore during Nov-14 to Dec-14 worth SGD43.3m.

The four projects are i) plumbing, sanitary and gas systems installation for Jewel Changi Airport, ii) sanitary, plumbing, gas, rainwater, wet/dry riser and fire hose reel systems installation for Woodland N1C 26 & 27, iii) sanitary, plumbing, gas, rainwater, dry riser and fire hose reel systems installation for Punggol West C40, and iv) aircon and mechanical ventilation system for a proposed Executive condo in Choa Chu Kang Grove.

During our Asean Corporate Day in Singapore, management highlighted its plans to realign their focus from residential buildings to commercial ones and with residential from HDB buildings to private apartments. We are positive about King Wan’s earnings growth outlook as it usually lags the construction industry, which witnessed robust growth two years ago.

King Wan’s ability to secure good long-term customers with a history of timely payments helps it to better manage its cash flows. Its strong orderbook into 2017 provides earnings visibility. We maintain BUY with a TP of SGD0.43 based on a 7% required yield.