On a historical earnings basis, YNM is not cheap at all, not for a construction-related stoc.
however, if it wins some nice deals in the next couple of months, esp the Thomson MRT line, then it could be re-rated. Personally, for a constrn play, I prefer Lian Beng Group @ 40 cents which also gives me exposure to property development
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[Guest 18-12-2012]:
How come Yongnam is not moving? I thought the warrants have expired?
In your opinion, will Yongnammove up soon? Cause I am vested after reading the many "buy" call on OCT 2012. However, it seems like what is keeping Yongnam stuck in its current price is not the warrants.
This is the kind of risk that we investors have a hard time factoring in:
As one of the subcontractors, Yongnam was supporting Alpine in the supply, lease, installation and removal of steel struts and walers for a Cut and Cover Tunnel and the Tan Kah Kee Station, in a subcontract valued at S$25.0 million (the “Project”).
Yongnam estimates its exposure to Alpine’s insolvency for the remainder of the Project to be approximately S$5.0 million. The Group is in communication with the Land Transport Authority for the next course of action.
DBS Vickers now has a target price of only 24 cents. Back to SQ One.
Lacks stock catalysts, potential downside risk to share price. Yongnam returned a poor set of results for 2Q13 with weaker than expected margins
and a slow order book. Stock catalyst had been centered around Yongnam winning one or both of the two airport projects, but Yongnam has now lost
out on both projects. Without the airport projects, organic earnings are expected to be weaker in FY14F due to its slow order book and weak margins.
Our previous TP was based on 10x target PE in anticipation of Yongnam winning the airport projects. Now that it has lost out on the Myanmar
projects, we revise TP to S$0.24 based on blended 7x FY14F earnings and book value per share of S$0.28.
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