OCBC Report - 19 March 2008

Tiong Woon Corporation Holding Ltd: Results synopsis

Summary: Tiong Woon Corporation Holding Limited (TWC) recently reported record profit before tax (PBT) of S$12.8m (a surge of 45% YoY) bolstered by a jump of 49% in revenue to S$65.8m for its 1H08 results ending Dec 31, 2007.

The increased in turnover was mainly attributed to the increased income of S$15.1m (+52% YoY) from the Heavy Lift and Haulage segment as well as maiden contribution of S$9.1m from the Fabrication & Engineering segment.

TWC’s Heavy Lift and Haulage segment contributed S$44.2m (or 67%) of the overall turnover in 1H08. This segment remains the core earnings driver, fueled by the increased construction activities both domestically and from the emerging markets such as Indonesia, Vietnam and Middle East.

For its maiden shipbuilding project, we understand that the pipe-laying barge is 20% completed and is slightly behind schedule due to the recent bad weather conditions. The management reassured that they are increasing the workforce productivity to bring the current schedule back on track.

TWC’s net gearing rose from 30% in FY06 to 48% in FY07, as a result of higher borrowings to fund its fleet renewal and develop the Bintan fabrication yard. As at 31 Dec 07, TWC’s net gearing increased further to 63%. We do not have a rating on this stock. (Serene Lim)

For more information on the above, visit www.ocbcresearch.com for the detailed report.

NEWS HEADLINES

- The US Federal Reserve cut its Fed Funds Rate by 75 basis points to 2.25%.
- Two US investment banks, Goldman Sachs and Lehman Brothers, posted forecast-topping (but still sharply lower) quarterly earnings.
- Moody’s downgraded Allco Reit from Ba1 to Ba2, and also signaled the possibility of a further cut in ratings. Allco had said earlier this month that it may sell its Australian properties valued at A$483m.
- The government will not award a landed housing parcel in Jurong West because the bids were too low, with the top bid at just S$77.8 psf.
- SIA said it was still in acquisition talks with China Eastern. Rival suitor Air China is also still hoping for a tie up with the much in-demand airline but is willing to look elsewhere if it has to.
- Mapletree Logistics Trust has acquired two properties in Singapore for S$56m under a sale-and-leaseback arrangement with a NYSE-listed Con-way Inc unit.
- Macquarie Global Property Advisors will spend about S$2b to build a commercial complex on two development sites at Marina View that it bought last year for almost S$3b.
- Kingsmen Creative has been awarded a S$14.5m deal by Resorts World at Sentosa to build props and show sets for an upcoming theme park.
- Peace Mark had received acceptances of 97.08% of Sincere Watch’s issued share capital at the offer’s close yesterday. It intends to maintain Sincere’s listed status and won’t exercise its powers of compulsory acquisition for the remaining shares.