Tiong Seng Holdings' latest commentary -- as contained in its 2Q2019 results announcement -- on the outlook of the construction industry does look positive: 

While industry observers expect a slowdown in the medium term due to a poorer economic outlook, the stronger performance currently witnessed in the buildings sector is likely to lift the construction industry in the short-term.

In addition, Singapore’s largest road project – the North-South Corridor – is set to begin by end-2019 and is poised to boost the construction sector’s short-term prospects further.

In the longer term, the infrastructure sector should act as a cushion to the cyclical slowdown in the buildings sector.

This is supported by Singapore’s large pipeline of megaprojects including the Changi Airport Terminal 5 and North-South Corridor Expressway projects which will start construction over the next few years.

As at 30 June 2019, the Group’s order book stands at approximately S$627.6 million, expected to extend till year 2023.



Notwithstanding a slower 1H2019, Tiong Seng Holdings continued to generate positive operating cash flows of S$25.2 million (1H2018: negative $49.7 million).

The Group held $45.3 million in cash as at end-June 2019.

S$’m

1H2019

1H2018

Change
%

Revenue

169.8

196.7

(13.7)

Net profit attributable to shareholders


2.7


6.1


(54.8)

The group said revenue decreased 13.7% year-on-year to S$169.8 million for 1H2019, due mainly to a decrease in work performed for the construction segment and lower revenue recognised for its property development segment.

As a result of an aggressively competitive pricing market, margins from the newer construction projects secured were narrower, translating to a 3.0 percentage point decrease in gross profit margin to 9.9% for 1H2019.

Overall, net profit attributable to shareholders declined 54.8% yoy to S$2.7 million for 1H2019.

At 22 cents, Tiong Seng stock trades at 0.37 of its net asset value of 59.80 cents/share.

LG StanChart"With a steady pipeline of infrastructure projects expected to roll out over the next few years, we remain cautiously optimistic that our constant investments in innovative construction technologies will place us in an advantageous position to capitalise on these opportunities and drive growth in the long-term.”

-- Mr Pek Lian Guan (photo),
CEO of Tiong Seng Holdings


Full 1H2019 financial results here.