Alpina - UOB Kay Hian 2022-03-16: Strong Presence In Singapore’s Public Sector; Trading At Attractive Valuation


Alpina - Strong Presence In Singapore’s Public Sector; Trading At Attractive Valuation

  • Alpina is an established integrated service provider specialising in the niche sectors of IBS, M&E engineering services and A&A works. It has a strong orderbook of S$151.0m (as at 31 Dec 21) and Alpina continues to proactively tender for new contracts.
  • Most of Alpina’s customers are in Singapore’s public sector and the majority of its earnings are recurring in nature.
  • With its track record, there is strong potential for Alpina to accelerate the extension of its Integrated Facilities Management (IFM) services to develop new revenue streams by cross-selling more services and solutions.
  • Alpina is trading at an attractive annualised 2021 P/E of 6x after listing expenses and offers a dividend policy.

Integrated service provider specialising in the niche sectors with established track record.

  • Alpina (SGX:ZXY) specialises in providing integrated building services (IBS), mechanical and electrical (M&E) engineering services and alteration and addition (A&A) works with a track record of more than 17 years.
  • Alpina has obtained the grading of L6 for its registration under the IBS Workhead, which is the highest grading and allows Alpina to participate in tendering for and executing IBS projects in the public sector with no tendering limits and project value limits.
  • Majority of Alpina’s projects are public sector projects in Singapore.

Recurring nature of projects with strong customer base.

  • The majority of Alpina’s projects (approximately 99%) are maintenance works in the public sector projects which include maintenance and repairs of:
    1. air-conditioning,
    2. refrigeration and ventilation works,
    3. communication and security systems,
    4. fire prevention and protection systems, and
    5. plumbing and sanitary works.
  • In summary, these projects are regular maintenance and services projects that are recurring in nature.
  • In addition, Alpina’s customers are good paymasters which include Singapore Government ministries and statutory boards governing education, environment, industrial infrastructure, housing, public libraries, sport culture, public utilities, national securities, public safety, civil defence, border control and public universities in Singapore.

Target to enhance grow via new segment and acquisitions.

  • Alpina aims to win more contracts in the space of enhanced facility management solutions as this sector should see better demand as more building facilities in Singapore are aging and require better care. Also, there are rising needs for customised and integrated solutions in redeveloped buildings. Alpina has extended its scope of services and obtained registration of the FM01 (Facilities Management) Workhead – Grade M3 in 2020.
  • On the other hand, Alpina is on the lookout for acquisitions (in the areas of cleaning services, landscape services, security services and pest control services, etc) to accelerate the extension of its IFM services to enhance its value propositions to customers and boost its revenue streams.

Attractive P/E multiple and dividend yield.

  • Alpina's share price is currently trading at only 6x 2021 annualised P/E (annualising 1H21 earnings of S$4.1m and deducting estimated listing expenses of S$1.2m).
  • Alpina currently does not have a fixed dividend policy, but it intends to distribute dividends of a minimum of 50% of its earnings for 2022 and 2023 as per stated in its prospectus.

Near-term key catalysts include:

  • Good financial results for 2H21. If Alpina delivers a good set of financial results for 2021, this will reinforce the merits of its business model and build a better track record for the company, which could be a boost in market confidence. Annualising 1H21 earnings of S$4.1m and deducting listing expenses of an estimated S$1.2m will result in 2021 earnings of S$7.0m, representing a 40% y-o-y growth from 2020 earnings of S$5.0m.
  • To recap, Alpina has delayed the release of its 2021 financial results from Feb 22 to around May 22 due to a delay in the auditing process, as most of the resources have been directed to the IPO process.
  • Winning of more contracts. Alpina has a healthy orderbook of S$151m as of 21 Jan 22 and it expects approximately 35.2% of the orderbook to be recognised in 2022 and the balance after 2022. Further winning of more contracts should improve the earnings prospects of Alpina.
  • Successful acquisition of earnings accretive synergistic businesses. Alpina intends to leverage on its network and explore M&A opportunities with parties in complementary businesses in Singapore or the region to strengthen its business model and/or gain access to new markets so as to build new revenue streams.
  • See

Singapore Research Team UOB Kay Hian Research | https://research.uobkayhian.com/ 2022-03-16
SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 99998.000 SAME 99998.000