BRC Asia - CGS-CIMB Research 2022-12-01: FY22 A Record Year In Revenue & Profits; 10% Dividend Yield

BRC Asia - FY22 A Record Year In Revenue & Profits; 10% Dividend Yield

  • Supported by recovery in Singapore’s construction activity, BRC Asia (SGX:BEC)’s 2HFY22 (Apr to Sep 2022) net profit rose to S$50m (+81% y-o-y), above expectations with FY22 coming in at 120% and 115% of our and Bloomberg consensus’ forecasts.
  • BRC Asia's 2H22 revenue grew 34% y-o-y to S$906m on the back of higher deliveries and steel prices. Gross margins expanded 3.1% points y-o-y to 9.4%, due to a net reversal of S$13m provision for onerous contracts during the period
  • BRC Asia declared final and special dividends amounting to S$0.12 bringing its FY22 total dividend to S$0.18 (54% dividend payout), implying a 10.2% dividend yield. See BRC Asia's Dividend History.
  • Based on advanced estimates released by Singapore Ministry of Trade and Industry (MTI), local construction sector growth accelerated to 7.8% y-o-y in 3QCY22, faster than the 4.8% y-o-y expansion in the preceding quarter. That said, MTI pointed out the value-add of the sector remained 18% below pre-pandemic levels. Recovery remains constrained by
    1. lower productivity given time needed to train the newly replenished workforce, and
    2. numerous stop work orders at construction sites due to worksite incidents.
  • With current industry orderbooks at robust levels (mainly backed by longer duration public projects), BRC Asia remains positive that construction activities can remain at healthy levels in the medium term. We remain positive on BRC Asia’s FY23F outlook anchored on strong construction demand and more supportive labour conditions.
  • Nevertheless, in view of a potential macro slowdown, we will be closely monitoring the strength of construction demand trends in the coming quarters – based on our past studies, there is typically a 12-18-month lag correlation between the two.
  • Reiterate ADD recommendation on BRC Asia as we expect fundamentals to remain healthy in FY23F, supported by a solid industry orderbook, coupled with attractive valuation of 6x FY23F P/E and 10% dividend yield.
  • We raise our FY23-24F EPS by 2.2-3.8% on the back of higher delivery assumptions; our target price for BRC Asia is kept at S$2.50, based on a lower 1.6x CY23F P/B as we roll over our valuation base year.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

ONG Khang Chuen CFA CGS-CIMB Research | Kenneth TAN CGS-CIMB Research | 2022-12-01

Previous report by CGS-CIMB:
2022-08-04 BRC Asia - Another Strong Set Of Results In 3QFY22.

Price targets by 3 other brokers at BRC Asia Target Prices.
Listing of research reports at BRC Asia Analyst Reports.

Relevant links:
BRC Asia Share Price History,
BRC Asia Announcements,
BRC Asia Dividends & Corporate Actions,
BRC Asia News Articles

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