Tiong Woon Corporation - CGS-CIMB Research 2020-01-06: Heavy Lifting Specialist


Tiong Woon Corporation - Heavy Lifting Specialist

  • Listed in 1999, TIONG WOON CORPORATION (SGX:BQM) is a one-stop integrated heavy lift specialist and service provider.
  • The group returned to profitability in 2Q18.
  • Currently trades at a historical FY19 P/BV of 0.50x.

SGX listed since 1999

  • Listed on the SGX Mainboard since 1999, Tiong Woon Corporation is a one-stop integrated heavy lift specialist and service provider, supporting mainly the oil and gas, petrochemical, infrastructure and construction sectors.
  • The group manages turnkey projects for engineering, procurement and construction contractors and project owners, from the planning and design of heavy lifting and haulage requirements to the execution stage, in which heavy equipment is transported, lifted and installed at customers’ facilities.

Strong regional presence

  • Headquartered in Singapore, Tiong Woon Corporation has a presence in Singapore, Malaysia, Brunei, India, Bangladesh, Indonesia, Philippines, China, Thailand, Vietnam, Saudi Arabia, Myanmar and Sri Lanka.
  • Based on its 2018 Annual Report, Tiong Woon Corporation has been appointed as the sole distributor of IHI crawler cranes in ASEAN (Association of Southeast Asian Nation) except Indonesia, and is the authorised dealer of all XCMG (Xuzhou Construction Machinery Group, 000425 CH) products in Southeast Asia and exclusive distributor for Zoomlion (1157 HK) tower cranes in Singapore.

Back to profitability

  • Tiong Woon Corporation returned to the black at the net profit level in 2Q18 after three consecutive quarters of losses. In the past three quarters, net profit rose from S$1.0m in 3Q19 to S$5.0m in 1Q20.
  • According to management, the recovery was driven by more projects executed in Singapore as well as more chartering jobs. Management guided that competition remained keen but major infrastructure projects and the pipeline of building projects in Singapore will bring more business opportunities.

Historical segmentals

  • In FY19, the heavy lift and haulage segment was the main revenue contributor, accounting for 90% of sales. The second-largest revenue contributor was the trading segment, at 6% of sales. The marine transportation segment accounted for the remaining 4% share of sales. In FY19 in terms of geographical exposure, Singapore accounted for the bulk at 75% of sales, followed by Brunei at 8% of sales. In FY19, one single customer accounted for 16% of total sales.
  • Tiong Woon Corporation reported an operating profit of S$8.1m in FY19 versus S$3.4m in FY18. The better performance was due to the heavy lift and haulage segment, which contributed an operating profit of S$7.1m as at FY19. The trading segment’s operating profit improved to S$1.5m as at FY19 versus S$0.1m in FY18. Losses in the marine transportation segment were reduced to S$0.5m as at FY19 versus S$1.6m in FY18.

Historical financials

  • Key observations of the past five years’ historical financials are:
    1. Tiong Woon Corporation returned to profitability in 2Q18. For the past three quarters, the group reported consecutively higher q-o-q net profit;
    2. BVPS (Book value per share) fell from S$1.165 in FY15 to a low of S$1.062 in FY17 before recovering to S$1.087 in FY19;
    3. In the past five years, Tiong Woon Corporation paid dividends except for FY17-18. DPS was 0.80 Scts in FY15 versus 0.20 Scts in FY18-19, see Tiong Woon Dividend History;
    4. Tiong Woon Corporation has been free cash flow positive in the past three years;
    5. Net gearing hit a high of 0.47x in FY16 but fell to 0.35x in FY19.

Historical valuations

William TNG CFA CGS-CIMB Research | https://www.cgs-cimb.com 2020-01-06
SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 99998.000 SAME 99998.000