18-03-2014, 07:12 PM
Transit is a less known company in SGX but apparently they have been in business for 35 years already, and is one of the biggest player in concrete pumping services in Singapore. Transit operates in 3 main business segments, (i) supply of ready-mixed concrete, (ii) rental of concrete pump equipment, and (iii) waste management services. Main source of income from the concrete pumping segment which contributed approx. 62.7% in FY2013, follow by 26.4% from concrete supply and 10.9% from waste management.
Supply of ready-mixed concrete
Net profit margin for this segment is rather low which is approximately 5%, the revenue from this segment has been quite stable at around S$5-5.5 million annually, the net profit before tax (excluding one-off items) from the last 5 years are ranging between S$250-350 thousand. Nothing much to expect as it is rather a stable figures with little surprise.
Concrete pumping
Profit margin from this segment is much higher at 15.1% in FY2013 (2012/2011 at 14.3%/18.8%). Year 2009 and 2010 were exceptional high at near to 40% profit before tax, which could be due to much lower depreciation and some other reasons which are unknown to me. For prudent purpose, I will assume the profit margin at 15%. Capex spending on the concrete trailer and boom are very high, S$2.2M in 2013, S$6.8M in 2012, S$3M in 2011 etc. With this expensive spending, we saw increases in revenue from S$9.4M in 2011 to S$13.3M in 2013. Capex spending were mostly financed with leases and overdraft, I don't know the true reason why Transit prefers overdraft facilities rather than term loan, but I guess is probably because of the flexible repayment option. Generally, revenue grows in accordance with the increase in total construction demands, I expect a slowdown in the construction activities from the private sector but on public infrastructure and housing is still positive in my opinion.
Waste management
Transit's major projects in this segment includes cleaning contracts at Resorts World Sentosa, SIAEC Base Maintenance, Changi Airport, 120 schools, Ngee Ann Polytechnic, Republic Polytechnic and waste disposal services at Marina Coastal Expressway Project. The margin is higher than the above 2, which is around 28-30% for year 2009 to 2012, but margin dropped to 23% in 2013 due to higher labour and operating cost, per management. Revenue increased rapidly over the past couple of years, from S$1.1M in 2009 to S$2.3M in 2013. Surprisingly, the segment asset and Capex spending aren't in tandem of the increases in revenue. It spends average of S$200K in Capex for year 2009 to 2012, but a huge S$500k in year 2013. There are little information on regarding the awarded projects, but with the unusual Capex for year 2013, I am expecting more contracts and higher revenue in this segment.
Since the year 2006, the company has been constantly paying out dividend ranging from 2c to 3.5c per share, which equivalent to about 5.8% to 10% dividend yield based on the current closing price. However the company has been in negative cash position and yet with million of overdraft. The latest 1H2014 result indicates that the company has managed to bring down the overdraft significantly by generating a positive cash flow of S$0.6M. It was also a great performance with revenue and profit both increased by 21% and 68% respectively, I trust that this was mainly from the waste management contribution.
Am looking forward to the upcoming FY2014 result, comments for the above is much welcome.
Supply of ready-mixed concrete
Net profit margin for this segment is rather low which is approximately 5%, the revenue from this segment has been quite stable at around S$5-5.5 million annually, the net profit before tax (excluding one-off items) from the last 5 years are ranging between S$250-350 thousand. Nothing much to expect as it is rather a stable figures with little surprise.
Concrete pumping
Profit margin from this segment is much higher at 15.1% in FY2013 (2012/2011 at 14.3%/18.8%). Year 2009 and 2010 were exceptional high at near to 40% profit before tax, which could be due to much lower depreciation and some other reasons which are unknown to me. For prudent purpose, I will assume the profit margin at 15%. Capex spending on the concrete trailer and boom are very high, S$2.2M in 2013, S$6.8M in 2012, S$3M in 2011 etc. With this expensive spending, we saw increases in revenue from S$9.4M in 2011 to S$13.3M in 2013. Capex spending were mostly financed with leases and overdraft, I don't know the true reason why Transit prefers overdraft facilities rather than term loan, but I guess is probably because of the flexible repayment option. Generally, revenue grows in accordance with the increase in total construction demands, I expect a slowdown in the construction activities from the private sector but on public infrastructure and housing is still positive in my opinion.
Waste management
Transit's major projects in this segment includes cleaning contracts at Resorts World Sentosa, SIAEC Base Maintenance, Changi Airport, 120 schools, Ngee Ann Polytechnic, Republic Polytechnic and waste disposal services at Marina Coastal Expressway Project. The margin is higher than the above 2, which is around 28-30% for year 2009 to 2012, but margin dropped to 23% in 2013 due to higher labour and operating cost, per management. Revenue increased rapidly over the past couple of years, from S$1.1M in 2009 to S$2.3M in 2013. Surprisingly, the segment asset and Capex spending aren't in tandem of the increases in revenue. It spends average of S$200K in Capex for year 2009 to 2012, but a huge S$500k in year 2013. There are little information on regarding the awarded projects, but with the unusual Capex for year 2013, I am expecting more contracts and higher revenue in this segment.
Since the year 2006, the company has been constantly paying out dividend ranging from 2c to 3.5c per share, which equivalent to about 5.8% to 10% dividend yield based on the current closing price. However the company has been in negative cash position and yet with million of overdraft. The latest 1H2014 result indicates that the company has managed to bring down the overdraft significantly by generating a positive cash flow of S$0.6M. It was also a great performance with revenue and profit both increased by 21% and 68% respectively, I trust that this was mainly from the waste management contribution.
Am looking forward to the upcoming FY2014 result, comments for the above is much welcome.