Tiong Seng Holdings Ltd - CIMB Research 2018-04-09: Early Adopter Of Prefab Technology

Tiong Seng Holdings Ltd - CIMB Research 2018-04-09: Early Adopter Of Prefab Technology TIONG SENG HOLDINGS LIMITED BFI.SI

Tiong Seng Holdings Ltd - Early Adopter Of Prefab Technology

  • Founded in 1959, Tiong Seng Holdings Ltd (TSNG) is a Singapore-based construction and civil engineering firm. It also has a property development arm in China.
  • Debts undertaken for The Equinox in China have already been paid off with the sales proceeds collected.
  • It is re-focusing away from the China property development business and back to the Singapore property market.
  • FY17 net profit doubled to S$30.9m as a result of the higher profitability of its construction segment.
  • Tiong Seng is trading at FY17 P/E of 5.8x and FY17 P/BV of 0.6x, with a dividend yield of 3.8%.

Construction firm and property developer 

  • Tiong Seng (TSNG) is principally engaged in building construction and civil engineering in Singapore, and property development in China. Its property development business focuses on developing residential and commercial projects in various second- and thirdtier cities in China.

Ongoing real estate development projects 

  • In China, Tiong Seng’s ongoing projects include The Equinox in Tianjin comprising landed and low-rise residential properties with a total of 172,000 sq m GFA, and Zizhulin, a planned 12,000 sqm commercial development in Tianjin. 
  • In Singapore, current residential projects include Goodwood Grand as well as two yet-to-be-launched projects, 17 Balmoral Road and Cairnhill Heights, which are expected to be launched in 2H18 and 1H19 respectively.

No more debt cost burden on projects in China 

  • Tiong Seng said its debts undertaken for the property development projects in China have been paid off using the sale proceeds collected. To-date, Tiong Seng is left with only 56 units yet to be sold for The Equinox in Tianjin. Three phases of The Equinox’s development have been completed while management expects the remaining four phases to be completed progressively up to 2021F.

Shifting focus back to Singapore property 

  • Citing challenges in the current China property market amid cooling measures, Tiong Seng intends to shift some of its capital away from its China property development business back to its Singapore business. 
  • Its latest acquisition is Carinhill Heights condominium which Tiong Seng, as part of a 60-40 JV with Ocean Sky International (OSI SP, Not Rated), had snagged for S$73m on 2 Apr 2018, below the sellers’ initial asking price of over S$80m.

Improving profitability from construction 

  • Net profit doubled to S$30.9m in FY17 from S$15.3m in FY16 as a result of better profit contributions from the construction segment, which made up 88% of FY17 revenue. 
  • The company had started building its own prefabricated pre-finished volumetric construction (PPVC) capabilities in 2014 and reported significant cost savings in FY17 in terms of labour and faster time to project completion with PPVC adoption.


  • Tiong Seng expects to see an influx of public sector projects in 2018F which it intends to bid for. The company’s order book as at 31 Dec 2017 of S$543m should keep it busy until 2020F, according to management.

Historical valuations 

  • The stock is trading at 5.8x FY17 P/E and 0.6x FY17 P/BV. It declared a dividend of S$0.008 in FY17.

Target Price: N/A

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

Colin TAN 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.