TEE International - OCBC Investment 2016-08-31: Ceasing coverage

TEE International - OCBC Investment 2016-08-31: Ceasing coverage TEE INTERNATIONAL LIMITED M1Z.SI

TEE International - Ceasing coverage

  • Firm sales at 183 Longhaus.
  • Engineering order book of S$229m.
  • FY16 net profits down 16.8%.

Real estate outlook remains challenging 

  • Management indicates that they expect the outlook to remain challenging in the key markets that they operate in and will prudently acquire landbank with the right pricing. More than 80% of Tee Land’s latest launch, 183 Longhaus, has been sold and the group’s real estate subsidiary also recently acquired a freehold site at 20 Lorong 25, Geylang, with plans ahead to develop it into a residential site.
  • We understand that Tee Land also seeks development and land acquisition opportunities for future growth in Thailand through its associated company, Chewathai Public Company Ltd.

Focus on delivering ongoing engineering projects 

  • At the group’s infrastructure business, management is focused on delivering ongoing projects and will also work towards expanding the group’s portfolio through participating in upcoming tenders for large-scale projects for airport, commercial buildings, retail malls, institutions of higher learning, and healthcare facilities in Singapore. 
  • In addition, TEE aims to to grow in the region by engaging more water, power and info-communications projects and has recently, partnered up with Nippon Koei Co Ltd with its associated company, Powersource Philippines Distributed Power Holdings, to grow its power business in the Philippines.

Ceasing coverage due to reallocation of resources 

  • The group recently announced that its FY16 net profit fell 16.8% to S$10.7m mainly due to lower gross margins, higher administrative expenses and finance costs, which was partially offset by a one-time gain in dilution of equity interest in associates and a higher share of results from associates and JVs. This was despite higher group revenues over the year, which increased 20.1% YoY to S$261.7m mainly due to stronger recognition at on-going engineering projects. 
  • TEE’s total outstanding engineering order book now stands at S$229m, of which more than half are attributed to Singapore based projects. The group also declared a final dividend of S$0.018. 
  • Due to a re-allocation of resources, we are CEASING COVERAGE on the counter.

Eli Lee OCBC Investment | http://www.ocbcresearch.com/ 2016-08-31
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