BRC Asia - Another Strong Set Of Results In 3QFY22
- BRC Asia (SGX:BEC)’s net profit rose to S$20.4m (double y-o-y) in 3Q22 (1 Apr 2022 to 30 Jun 2022), bringing 9M22 net profit to S$60.2m (+105% y-o-y), coming in above expectations at 86% of our full-year forecast.
- Revenue climbed 52% y-o-y to S$515m in 3Q22 on the back of higher deliveries and higher steel prices (+40% y-o-y). Meanwhile, net margins also expanded 1.0% pt y-o-y to 4.0%, which we believe signals BRC Asia (SGX:BEC)’s capability to pass on some of the higher costs.
- Construction output in Singapore saw further recovery in 2QCY22, though transient issues arose from
- increased workplace incidents (and lower productivity) given time needed to train the newly replenished workforce, and
- increased number of stop-work orders at construction sites due to increased dengue and COVID-19 cases reported.
- Nevertheless, we view these as transient issues which should be alleviated in the upcoming quarters. We continue to expect further recovery in construction activities in 2HCY22.
- We reiterate our ADD call as we see continued tailwinds for BRC Asia as construction activities recover further. We raise our FY22-24F earnings per share (EPS) forecast for BRC Asia by 8.0-8.7% on the back of higher deliveries and margin assumptions. Our target price for BRC Asia remains at S$2.50, now based on a lower 1.74x CY22F P/BV (previously 1.79x CY22F P/BV), due to higher risk-free rate assumptions.
- We view the current valuation as attractive, as BRC Asia is only trading at ~6x FY23F P/E. With strong free cashflow generation, we also believe that BRC Asia can potentially offer dividend yield of 11% (assume a 60% dividend payout ratio).
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
ONG Khang Chuen CFA CGS-CIMB Research | Kenneth TAN CGS-CIMB Research | https://www.cgs-cimb.com 2022-08-04 2022-08-04
Previous report by CGS-CIMB:
2022-05-12 BRC Asia - Riding On Industry Tailwinds
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