TIONG SENG: 2017 shaping up to be best in 5 years

	2012	2013	2014	2015	2016	1H17
Net profit attributable to shareholders	$25.7m	$9.3m	($15.3 m)	$10.2 m	$15.3m	$14.3 m

This year is shaping up to be the best in five years for construction company Tiong Seng Holdings.

Stock price	32 c
52-week range	21 – 38 c
PE (ttm)	6.8
Market cap	S$144.4 m
Shares outstanding	451.4 m
Dividend yield (ttm)	2.5%
Year-to-date return	42%
Source: Bloomberg

Its 1H2017 net profit of $14.3 million is only a whisker away from the $15.3 million achieved for the entire 2016 -- and exceeds the performance of the full years 2013, 2014 and 2015.

Not surprisingly, its stock price (32 cents) is up 42% in the year to date. And the company has bought back 2.61 million of its shares so far this year.

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Pek Lian Guan, CEO, Tiong Seng Holdings. NextInsight file photo

S$’000	2Q17	2Q16	Change %
Revenue	219,749	158,024	37.2
Net profit attributable to shareholders	10,203	4,473	128.1

Its 2Q performance, announced last week, showed that the construction segment continued to be the star contributor.

Its revenue surged 36.5% to S$399.6 million as it entered into a ramp-up phase for various projects.

S$’000	1H17	2H16	Change %
Revenue	424,440	405,205	4.7
Net profit attributable to shareholders	14,293	8,210	74.1

Segment profit for construction was $22.5 million while it was a loss of $1.6 million for the property development segment, largely on a fall in revenue recognition (S$23.8 million versus $111.7 million in 1H2016).

Major business segments		1H2017 (S$‘000)	1H2016 (S$‘000)	Change (%)
Construction contracts	Revenue	399,637	292,708	36.5
Construction contracts	Operating profit	22,514	13,932	61.6
Sale of Development Properties	Revenue	23,839	111,645	(78.6)
Sale of Development Properties	Operating profit/(loss)	(1,636)	5,972	n.m.

KenChoo t6.2016 Ken Choo, CFO of Tiong Seng. NextInsight file photoOperating cash flow in 1H17 was strong at S$53.3 million, enabling Tiong Seng to repay a whopping $50.2 million in borrowings in 1H17.

This reduced its total borrowings to $126 million, the lowest level in at least the past five years.

Its gearing ratio continued to improve to 0.40 (31 Dec 2016: 0.55).

Risk: Tiong Seng's construction orderbook has dropped from $1.3 billion in June 2016 to $1.0 billion at the start of 2017 to $730 million at end-June 2017.

Its strategy:

♦ The creation of a civil engineering unit to target infrastructure projects.

♦ Maintain its leadership position in the industry by consistently investing in construction technologies. (See: TIONG SENG @ Singapore Construction Productivity Week 2016)

♦ Tapping on increased government legislation for more labour-saving technologies.

In the property development segment, $117.2 million of gross development value were sold but yet to be recognised as revenue, as at end-June 2017.

Buying sentiment in China -- where the bulk of Tiong Seng's development projects are located -- remains robust but the government continues to apply cooling measures to moderate property prices in China.

In Singapore, Tiong Seng expects to complete its development project, Goodwood Grand in Balmoral Road, by end-2017.

It has recently acquired two freehold sites in Jervois Road, in the prime district 10, to redevelop into residential units.

TIONG SENG: 2017 shaping up to be best in 5 years

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