Sin Heng Heavy Machinery Limited - CIMB Research 2018-03-20: Management ~ Markets Remain Challenging

Sin Heng Heavy Machinery Limited - CIMB Research 2018-03-20: Management: Markets Remain Challenging SIN HENG HEAVY MACHINERY LTD BKA.SI

Sin Heng Heavy Machinery Limited - Management: Markets Remain Challenging

  • Sin Heng Heavy Machinery Limited has nearly five decades of experience in providing heavy lifting services to a diverse range of industries.
  • The company reported a net profit of S$1.2m in FY6/17 vs. a loss of S$4.1m in FY16.
  • Sin Heng slipped into net loss of S$0.5m in 2QFY18 (Oct-Dec 2017).
  • As at end-Dec 2017, Sin Heng’s net gearing was 0.16x.
  • Sin Heng is trading a historical FY17 P/BV of 0.39 x vs. the local peer average of 0.43x.



Established heavy lifting solutions company 

  • With a history tracing back to 1969, Sin Heng has accumulated nearly five decades of experience and expertise in providing comprehensive lifting solutions to customers in infrastructure and geotechnic, construction, offshore and marine as well as oil & gas industries. 
  • Landmark projects in Singapore that Sin Heng was involved in include Singapore Flyer, Resorts World at Sentosa, Marina Bay Sands Integrated Resort, Marina Bay Financial Centre, Marina Coastal Expressway and Changi Airport Terminal 5.


Able to handle low- to high-volume projects 

  • Sin Heng’s core business is the rental and trading of cranes, aerial lifts and other lifting equipment. The company also sells and distributes related parts. Sin Heng has the dealership rights for the sales and distribution of cranes and parts for Kobelco, one of the world’s top crane manufacturers. The company is also the distributor for Kato, one of the world’s leading hydraulic crane manufacturers. Other key distributorships include Mighty Crane, Arcomet and Manitowoc.


Returned to profitability in FY17 

  • For FY17, Sin Heng reported a net profit of S$1.2m, reversing a loss of S$4.1m in FY16. This was driven by an 8.2% y-o-y rise in sales, a 4.1% pt increase in gross profit margin and a 11% decrease in administrative expenses. 
  • For the quarter ended-Dec 2017, Sin Heng reported a loss of S$0.5m.


Balance sheet 

  • As at end-Dec 2017, net gearing was 0.16x. 
  • Sin Heng paid a dividend for each of the past five years except FY16 when it reported a loss of S$4.1m. Sin Heng does not have a formal dividend policy but the company has paid dividends in years when it was profitable. 
  • For FY17, Sin Heng generated free cash flow of S$24.3m or S$0.21 per share.


Management: markets remain challenging 

  • In its 2QFY18 (Oct-Dec 2017) results announcement, Sin Heng commented that the business environment continues to be uncertain and competitive, and the group expects the markets in which it operates in to remain challenging. 
  • Sin Heng is trading a historical FY17 P/BV of 0.39x vs. the local peer average of 0.43x.







William TNG CFA CIMB Research | http://research.itradecimb.com/ 2018-03-20
CIMB Research SGX Stock Analyst Report NOT RATED Maintain NOT RATED 99998 Same 99998


* This Eyes On the Ground report represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.



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