Hock Lian Seng announced a dividend per share of 1.8c. With EPS for the full year 2012 at 4.9c, we are looking at a payout ratio of 36.7%.Although dividend is lower compared to the preceding year's 2.0 c per share, the payout ratio has actually gone up. This is because EPS is down some 20%, year on year, compared to the previous year which saw EPS improving 15.1%.
The numbers are not fantastic, for sure.
I did not expect the company to go into industrial and residential property development but they have done so. They are probably somewhat late as after seven rounds of property cooling measures by the government, it could be harder to find buyers even for industrial properties. This could be a drag on its performance.
However, with the Singapore government planning to spend some really big money on the MRT network through 2030, it is unimaginable that Hock Lian Seng would not participate in nor benefit from the exercise. So, it is probably a good idea to stay invested for this reason.
Mr. Chua Leong Hai, the Chairman and CEO, said that they are excited about the prospects for the entire local construction industry with the government's plans to improve Singapore's infrastructure.
Being a Grade A1 contractor in the Building and Construction Authority of Singapore’s (BCA) civil engineering category, it is more than likely that Hock Lian Seng would be successful in capturing their fair share of new contracts.
With share price at 30c, PER is approximately 6x. By this measure, Hock Lian Seng's stock does not look expensive. However, the technical picture hints at ongoing distribution activity. Immediate support is at 29c.
For anyone thinking of buying in, bear in mind that the company's performance could be lacklustre in the near term. Therefore, we cannot rule out the possibility of being able to buy the stock cheaper in the next 12 months.
See press release: here.
Related post:
Hock Lian Seng: 2c dividend per share.
Hi AK71, the Chuas are nice and honest folks, came across them in my earlier "life" , have been watching this counter but stayed out as there is low vol. ;)
ReplyDeleteHi Garfield,
ReplyDeleteInsider perspective is always welcome. ;)
Honesty is an attribute we want in the management of our companies.
I don't mind low volume actually. Look at Old Chang Kee. ;p
I found industrial properties, a commodity good with a limited buyer group. It is also highly volatile, public projects r hard to come in recent years, I think with the projected popn gth, they finally see some light at the end of the tunnel.
ReplyDeleteHi Garfield,
ReplyDeleteIndeed, things are looking up for the local construction sector as the Singapore government embarks on large scale infrastructure projects. :)