Major Completed Projects
MRT Contract 405 Construction, Completion & Maintenance Of Viaducts & Tunnels And Bukit Batok, Bukit Panjang Stations in 1990 for Mass Rapid Transit.
Contract size: $330M
Taipei Metropolitan Area Rapid Transit Systems, Nankang Line Contract 255 Stations BL10 and BL11 And Line Section / Pedestrian Mall BL10 TO BL11 in 2000 for East District Project Office Department Of Rapid Transit Systems, Taipei Municipal Government Taiwan, China.
Contract Size: $166.381M
*MRT North East Line Contract 702 Construction And Completion Of Sengkang And Buangkok Stations Including Tunnels in 2002 for the Land Trasport Authority.
Contract Size: $296.5M
Contract 821 Construction And Completion Of Kim Chuan Depot in 2007 for Land Transport Authority.
Contract Size: $348.4M
Contract 901 Construction And Completion of Marina Bay Station Including Associated Tunnels for Downtown Line Stage 1 completed in 2013 for Land Transport Authority.
Contract Size: 305M
Contract 481 Design, Construction And Completion of Marina Coastal Expressway (Marina Wharf) in 2011 for Land Transport Authority.
Contract Size: $410M
*Contract 911 Design and Construction of Depot for Downtown Line completed in 2015 for Land Transport Authority.
Outlook
Financials
22 Feb 12, Hock Lian Seng released their FY2011 financial report with a 29% decreased in revenue due to the lack of new orders on hand. Civil Engineering remained as their core business with 93% of their total revenue followed by the sale of building materials and misc which make up the remaining 7%. According to the report, despite a lower revenue, gross profit increased by 35% due to the full operation of the worker’s dormitory which generated a gross profit of $5.5M as compared to the start up in 2010 which reported a loss of $0.2M.
They now have a current book order of $227M which made up of mainly the balance work for the Circle Line’s Depot and Marina Costal Expressway Projects.
Future Challengers
In the coming months will be a number of projects called for tenders by the Singapore Government. However, the group states that it will face stiff competition from large foreign contracts as well as high construction costs and a shortage of foreign workers.
Dividend Yield
With the share price of $0.265 per share and the dividend payout of $0.02 cents a share made up a very decent return of 7.55% yield.
PE Ratio
The higher the PE ratio indicates an expensive price with more expectations for the company to perform. At the PE ratio of 4, the market valued this company 4 times its earnings. It is below the 8 mark which in my opinion is an undervalued stock taking into consideration that the company will earn more project orders in future.
Net Asset Value
Net asset value per share of a company is equivalent to a company’s assets - liabilities which make up the asset/liabilities in which a share is holding. With the NAV of $0.22 and the current share price of $0.265, one share is worth 83% of its assets.
Summary
With a 7.5% dividend yield, PE ratio of 4 and an attractive 83% worth of its asset per share, is an undervalued stock at the current price of $0.265 per share.
However, growth in this company remains uncertain with no current orders on hand. And furthermore, it had many competitors to competite for projects.
With more than 40 years of experience with its business with the government, i believe that it will do well in the years to come. The company now is in a very healthy financial position with $172M cash on hand and only $72,000 worth of debt.
About Hock Lian Seng (From SGX)
The Company was incorporated in Singapore on 20 May 2009 under the name Hock Lian Seng Holdings Pte Ltd. On 3 December 2009, the Company was converted into a public limited company and changed its name to Hock Lian Seng Holdings Limited.
Since its establishment in 1969, Hock Lian Seng Holdings Limited has undertaken and completed a wide range of civil engineering projects for both the public and private sectors in Singapore. The Group carries out civil engineering works for bridges, expressways, tunnels, Mass Rapid Transit (“MRT”), port facilities, water and sewage facilities and other infrastructure works. Its past projects include:
- Changi Airport Terminal 3 Project
- Sungei Serangoon Bridge Project
- Jurong River Bridge Project
- Telok Blangah Expressway Project
- Kim Chuan Depot Project
- Toh Guan Road Extension Project
The Group's major customers include government and government-related bodies of Singapore, such as the Land Transport Authority of Singapore, the Housing & Development Board (“HDB”), PSA Singapore Terminals (formerly,Port of Singapore Authority) and the Civil Aviation Authority of Singapore.
Published on 26 Feb 2012
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