Tiong Woon FY07 result

Tiong Woon just released the full year result.

Highlight:

• Net profit $22.5m, up 155% from previous year

• Revenue up 44% to S$99.8 million

• Earnings per share: 6.67 cents, up 146%

• Net Asset Value per share: 32 cents, up 26%

• Return on Equity: 23% (FY2006: 12%)
  

* Increase of ROE signal better deployment of shareholder's fund

Facts:

• The company is currently ranked 11th largest crane owning company worldwide by International Cranes, a reputed trade magazine, in its IC50 2007 survey.

• Going forward, the Group plans to actively pursue business opportunities in construction, infrastructure, offshore marine, power plants, petrochemicals and oil and gas projects in markets such as China, Thailand, Malaysia, Indonesia, Vietnam and the Middle East.
  

• Earlier this year, TWC became the first Singapore company to be awarded investment licence to operate 100% foreign-owned entity in Saudi Arabia by Saudi Arabian General Investment Authority (SAGIA) Singapore.

• In November 2006, it acquired a 65-hectare fabrication yard in Bintan, Indonesia, with a view to supporting its current fleet of heavy lift equipment, tugs and barges, and in due course, growing a new income stream from fabrication and engineering projects.
  

Five-pronged business strategy:

• To remain focused on its core competency of heavy lift and haulage;
• To develop its fabrication and engineering competency for marine, oil & gas industry;
• To actively seek business opportunities in the emerging and growth markets;
• To invest in higher capacity and specialised equipment; and
• To forge alliances and co-operation with strategic and industry players.

From financial statement:

• Turnover increase 44%, while cost of sales only increased by 37%
• Cash generated from operation is 30,585 compare to 16,906 last year

My comment:

This is really a good result for share holder. In future, the construction boom in Singapore and offshore & marine cycle would keep driving the demand for crane and other engineering service. Looking to enter this counter at attractive price. If ever, the market downward swing is coming back, would enter at lower price.

Kim Eng recommendation (updated 29 Aug):

Along with our EPS upgrade, we are raising our target price to S$1.15 based on a PEG of 0.7x, which translates into FY08 PE of 16.3x – in tandem with our other Downstream O&G plays. Reiterate BUY.