Construction counters

[yeokiwi]

Hi all,

Anyone interested in construction counters?
Many of the construction counters are in great shape due to the building of condos, IRs, infrastructures and many construction counters are also involved in property development.

LKH Sp. This counter is followed by many forum members in afralug. The recent release of interim results:

Revenue has decreased but interim profit is increased by 50% at 48 million. The earning per share is 6.42 cts.
No debt. Fantastic.
Total cash. $160 million! that's equivalent to 21.6cts of cash.
NTA is 40cts but many of the assets are not valuated at current market value.

LKH has 40% stake in Minton rise and with the low psf cost, it is expected to contribute significant earning in the next 3 years.

I will go on to other construction counters next time

[arthur]

One counter I would think up of is Yong Nam. In all honesty, I yet to look at it's financial statements, but the underlying business structure does tie in with the increasing no. of MRT and underground expressways to be constructed this coming decade.

In it's specialisation, that is doing strutting works, it is above it's competitors in the market, which in the first place, does not have many competition anyway.

Have fun sieving through the statements.

Not vested though. Just not my cup of tea.

[ngcheeki]

KSH is one of my favourites construction counters. It has good dividend yield, 2009 dividend was 2 cents, 1 cent for interim and 1 cent for year end. Besides, it also has pretty strong balance sheet. The following is some of the information, I have:

Total equity after Minority Interest(S$ '000) $112,930.00
Total Number of Shares ('000) 294,563.20
NTA (S$) $0.3834

Cash and Cash equivalent $90,019.00
Trade Receivables $26,950.00
Investment properties (Sheares Ville, TinJin TianXing) $94,810.00
Construction WIP $4,754.00
Development property (25% - Lincoln Lodge) $58,437.00
Investment in associates (35% - Mergui, 26.24% - Beijing jin Hua Tong Da Real Eatate) $12,299.00
Total values $287,269.00
(16+17+18)/Total Number of Shares $0.9752

Cash (S$ '000) $90,019.00
Cash Per Shares(US$ '000) $0.31

Total Current Asset $184,122.0000
Total Current Liability $136,161.0000
Total Long term Liabilities $78,975.0000
Net Current Asset -$31,014.0000
Net Current Asset Per shares -$0.11

Price to Book Value 0.70

Besides the above, it is going to launch is 30% owned cityscape which they acquired for $576 psf which expected average
selling price of $1,500 psf near the farrer MRT station near to City Square Mall. At 1Q FY2010, it has ordered book of $312 millions.

Vested on KSH.

Besides KSH, I'm also looking at BBR which trade close to it NTA as well as Tiong Seng which has $1 billion order book.

[yeokiwi]

Koon Holdings.

Koon Holdings is a relatively small construction company that specialises itself in landscaping. The company is listed in both SGX and ASX. Recently, Koon bought over a precast company in Singapore and a power generation company in Australia.

Share price 45.5 cts
Half year interim earning per share 7.35cts
NTA 50.62cts
Cash equivalent $31.4 million or 38.3 cts per share as of June 2010 but $10million was used recently to buy Tesla ltd in Australia.
Long term loan is less than $2million
Current order book is $267million.

[yeokiwi]

Lum Chang

Net profit ended 30 June 2010 is $25 million.
There is no debt to be repaid within a year.
Only a $15 million secured development loan to be repaid after a year.
Total cash available $70 million or 18.5 cts per share.
Earning per share is 6.7 cts for the current year.
NTA is 38.8cts
Currently, Lum Chang is currently building the MRT at Bukit Panjang and the total worth of contracts that LC had won till date is $565.5 million. Recently, LTA has exercised two options worth $56million related to Bukit Panjang MRT to Lum Chang. Lum Chang is also awarded $119 million condo building contract in Seng Kang by FCL.

The amount of contract (about $736million) won till date is able to generate enough revenue for LC for the next three years at least.

[yeokiwi]

Updated info on Koon Holdings.

Koon Holdings has announced that it will disposed a property and some marine vessels. The total cash that will be raised from the sales is around 14.63 million or 18.1cts per share.
Current cash level per share will be raised to 38.3+18.1 = 56.4 cts
The purchase of australian power generating company is around 10 million and that will reduce the cash pile to 44.1 cts.

Koon will book a total profit of $6.6 million from the sale of property and vessels.
Therefore, the profit per share from the sales is 8.1cts.
The half year earning is 7.35 cts

Total earning per share is likely to exceed 20cts for the current financial year.

Koon holdings also announced a 1-to-1 bonus share issue at the same time with the sale announcement...(waste of time and effort....)

[FFNow]

I'm looking to invest in a good construction coy with solid fundementals and future prospects. However, I don't know much about this sector.With so many companies in the construction sector and so many different metrics to look at, how does one go about analysing (i.e. which metric to look first,etc). Also, is BCA A1 rating essential when buying a construction counter?

[yeokiwi]

I am not sure whether is there any construction companies that can have good future prospects. A pure construction company basically depends on projects from public infrastructures building and private residential development.

Currently, the government is pumping in lots of money to build many public infrastructures to cater for an enlarged population.
HDB alone is going to build more than 18000 flats this years.
Private sectors are likely to contribute a few thousands more.
Western stretch of downtown MRT line is currently under construction.
Eastern stretch will be awarding contracts probably in the next year.
Redevelopment of railway land will probably take place the year after next.
MRT line to JB.

But, normally, I would prefer those construction companies that have some properties development for earning diversification.
LKH, Lum Chang, BBR, KSH holdings belong to these kinds of categories.
But, I also like Koon Holdings because of the large cash hoard.
OKP holdings is also another pure construction play that is doing very well in road construction.

For inital analysis, NAV is probably the best gauge for construction companies and if future earnings from projects can be factored in to the NAV, it would be even better.

[dydx]

Koon Holdings has announced that it will disposed a property and some marine vessels. The total cash that will be raised from the sales is around 14.63 million or 18.1cts per share.
Current cash level per share will be raised to 38.3+18.1 = 56.4 cts
The purchase of australian power generating company is around 10 million and that will reduce the cash pile to 44.1 cts.

Koon will book a total profit of $6.6 million from the sale of property and vessels.
Therefore, the profit per share from the sales is 8.1cts.
The half year earning is 7.35 cts

Total earning per share is likely to exceed 20cts for the current financial year.

Koon holdings also announced a 1-to-1 bonus share issue at the same time with the sale announcement...(waste of time and effort....)

Koon, which has 'kooned' for a long time, has really woken up! Today, Koon hit a high of $0.615, and closed at $0.60.

[yeokiwi]

ya... kooned so long.
Construction companies in Singapore are doing well. I think many have shunned construction companies due to the bad records in the late 90s and early 2000s. Many construction companies were undercutting each other and bidding below cost during the period.

Currently, most of the construction projects were funded by government. For private properties development, most property companies are in good shape. The probability that a construction company will not be paid is low.(except Ho Lee construction for Big Box ... )

As long as the NAV and balance sheet are in good shape, a portfolio of construction counters should give a good return in the next 2-3 years.