BBR posted their FY 2012 results yesterday evening. Personally speaking, on balance I’m pleased with the announced results and the outlook.
http://info.sgx.com/webcoranncatth.nsf/V...A003AA7A9/$file/BBR_FY2012_profit_announcement.pdf?openelement
Four Positives:
+ve: Total
dividend growth of 50%. A FY 2012 dividend of S$ 0.012 has been proposed – including a S$ 0.004 special component (vs. S$ 0.008 total dividend in FY 2011). Including the special, dividend yield now stands at a more respectable ~ 4.6%, based on Friday's closing price.
+ve:
Margin moving in the right direction. Due to project mix, BBR’s gross profit margin increased from ~ 10.1% in FY 2011 to ~ 12.9% in FY 2012.
+ve: Debt levels (approximately) halved, removing one of my key concerns. BBR talk to a
much improved liquidity position.
+ve:
Very healthy order book, now standing at ~ S$ 960 Mln, with projects over the coming three years.
Four Not-so-positive’s:
-ve: Although fully expected,
FY 2012 revenues and net profit levels were down ~ 33.7% and ~ 35% respectively as compared to FY 2011. Mainly due to Sales at Lush on Holland Hill (and some other smaller projects) being finalised in FY 2011. BBR’s revenue realisation remains “lumpy” (I see this as normal for a construction company such as BBR).
-ve: I strongly suspect that when other construction companies announce their results, we'll see that
BBR’s dividend yield trails that of some of its key competitors. Note that BBR did not increase its “base” dividend level.
-ve: CEO Andrew talks soberly to the impact of the
Singapore Government’s introduction of further measures to cool property prices. My sense, from reading the Press Release that BBR issued concurrently with its FY 2012 results, is that going forward BBR are targeting a reduction in the proportion of private residential development projects and a higher proportion of Government/Public Sector related work (probably wise?).
-ve: Also as regards outlook, BBR say that QUOTE …… the construction industry is expected to be challenging in the next 12 months with
increasing competition and expected increases in labour and material costs. Construction gross margins are expected to be lean and shortage of skilled and unskilled workers may affect the future progress of projects UNQUOTE.
NAV/share increased > 10% to over S$ 0.31. At the last done price of S$ 0.26, BBR’s share price now trades on a P/E of ~ 6.2 and currently stands at a ~ 18% discount to NAV. On balance, me thinks this one has more upside than downside. I'll be hanging on to my holding.
Vested