Nam Lee's 1H 2014 results are out :
http://infopub.sgx.com/Apps?A=COW_CorpAn...1Q2014.pdf
At first brush the 1H year on year numbers don't look great :
Sales : $78.855 vs $79,358
Gross Profit : $12,597 vs $15,079
Operating Earnings : $3,431 vs $6,732
Net Income : $3,186 vs $5,306
As usual, they don't break out the numbers by quarter but reconstructing them, I get the following :
Revenues :
Q1 2013 : $37,146
Q2 2013 : $42,212
Q3 2013 : $44,110
Q4 2013 : $47,330
Q1 2014 : $42,000
Q2 2014 : $36,755
Gross Profit (margin) :
Q1 2013 : $7,330 (19.7%)
Q2 2013 : $7,749 (18.4%)
Q3 2013 : $5,839 (13.2%)
Q4 2013 : $4,916 (10.4%)
Q1 2014 : $5,850 (13.9%)
Q2 2014 : $6,747 (18.4%)
Operating Income (Margin)
Q1 2013 : $3,106 (8.4%)
Q2 2013 : $3,626 (8.6%)
Q3 2013 : $1,475 (3.3%)
Q4 2013 : $ 721 (1.5%)
Q1 2014 : $1,839 (4.4%)
Q2 2014 : $1,592 (4.3%)
Net Income (Margin)
Q1 2013 : $2,519 (6.8%
Q2 2013 : $2,787 (6.6%)
Q3 2013 : $ 932 (2.1%)
Q4 2013 : $ 2,790 (5.9%)
Q1 2014 : $1,863 (4.4%)
Q2 2014 : $1,323 (3.6%)
What is interesting is that the gross margin has recovered significantly over the past three quarters (from a low of 10.3% in Q4 2013 to 18.4% in Q2 2014) which you would expect since the company had attributed poor earning in 2H 2013 to cost overruns of one construction contract (undisclosed which one but on Next Insight there was speculation that it was related to JEM). That contract is finished and gross margins have bounced back. Unfortunately, sales are down so operating and net income margins are suffering as SG&A costs have not come down correspondingly.
The company continues to be cautious in its outlook :
"Although the outlook for global economy remains uncertain, the Group expects the aluminium industry business to contribute positively to the performance of the Group.
The slow down in the local property market, coupled with new entrants to the market, are expected to have some impact on the Group's building products
business.
The Group expects that the increasing costs in the operating environment and market competition will continue to exert pressure on profit margins."
With gross margins having, seemingly, reverted back to normal, we will now have to wait to see if they can either boost sales or cut SGA to get profits back to an acceptable level again. On an NAV basis, the stock continues to look exceptionally cheap (30 cents share price vs 47.2 cents NAV) but on an 8x historical PE and 10x trailing 12 months PE it looks less so. Dividend was cut in 2013 to 1.5 cents (previously 2 cents) to still give a respectable 5% yield and given that the company is debt free, I would expect dividends to continue.
(vested)