TA Corp - CIMB Research 2018-04-09: Established Construction Company

TA Corp - CIMB Research 2018-04-09: Established Construction Company TA CORPORATION LTD PA3.SI

TA Corp - Established Construction Company

  • TA Corp is an established construction company with more than 40 years of experience in Singapore.
  • The construction business accounted for 68% of revenue in FY17.
  • Its three other business segments accounted for the remaining 32% of its FY17 revenue.
  • TA Corp has paid a yearly DPS of 1.0Scts over the past five years.
  • TA Corp is trading at FY17 P/BV of 0.72x and has a dividend yield of 3.70%.



Established construction company 

  • TA Corp is an established property and construction company. TA Corp also provides workers’ training and accommodation in Singapore and across the region. The company has a reputation as a developer of quality, well-located residential developments, targeting the middle- to upper-middle markets. 
  • It has also ventured overseas through joint-ventures in property development projects in China, Thailand and Cambodia.


Reputable clients 

  • TA Corp’s construction business is undertaken via its wholly-owned subsidiary, Tiong Aik Construction Pte Ltd, which has a track record of over 40 years in Singapore. The Group has built a solid reputation as a reliable building contractor with the ability to undertake a wide spectrum of projects for both public and private sector clients. 
  • Customers include government bodies such as the Housing and Development Board and established real estate developers such as CapitaLand Residential Ltd (unlisted).


Focus on productive construction technologies 

  • TA Corp has a pre-cast concrete components manufacturing plant in Johor, Malaysia which has a capacity of 36,000 cubic meters p.a. This factory supplies products to major infrastructure, commercial and residential projects in Singapore and Malaysia. 
  • TA Corp also has an 80%-stake in TK Modular Pte Ltd (unlisted) which designs, develops, manufactures and distributes Pre-fabricated Pre-finished Volumetric Construction (PPVC) modules to Singapore property developers.


Myanmar exposure 

  • TA Corp also has a fast-growing distribution business in Myanmar. Its 51%-owned Que Holdings (unlisted) is the exclusive distributor of the ‘Continental’ brand of passenger & light truck tyres in Myanmar, as well as the sole distributor of ‘Shell’ lubricants. 
  • Another associated company, 50%-owned Myanmar Synergy (unlisted), is the exclusive distributor of trucks, buses, vans and other commercial vehicles under the ‘Iveco’, ‘Astra’ and ‘Zhong Tong’ brands.


Outlook

  • TA Corp said it will continue to act cautiously while exploring real estate development business opportunities both locally and overseas. Although the foreign worker dormitory market remains challenging, TA Corp said it will continue its efforts to increase the rental and occupancy rates in its dormitories. 
  • The company remains confident of its construction segment’s performance. Its construction order book stood at S$241m as at 31 Dec 2017, to be delivered progressively over the next three years.


Historical valuations 

  • TA Corp is trading at FY17 P/BV of 0.72x with a dividend yield of 3.70%. 
  • TA Corp was loss-making in FY17.



NOT RATED
Target Price: N/A


(This report is linked to Singapore Construction Companies - CIMB Research 2018-04-09: Key Takeaways From Conference)


William TNG CFA CIMB Research | http://research.itradecimb.com/ 2018-04-09
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 CGS-CIMB's coverage universe. It does not carry investment ratings and CGS-CIMB does not commit to regular updates on an ongoing basis.



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