Yongnam third quarter profit up 23.3% to S$16.8m

The company obtains a strong order book of S$480mn as at Sept 30, 2011.

Yongnam Holdings Limited (“Yongnam”), a well-established structural steel contractor and specialist civil engineering solutions provider, reported another record quarterly net profit for the three months ended September 30, 2011 (“3QFY2011”). Net profit improved 23.3% to S$16.8 million from S$13.7 million in the previous corresponding quarter (“3QFY2010”). Revenue increased by 7.1%, from S$80.8 million in 3QFY2010 to S$86.5 million in 3QFY2011.

Mr Seow Soon Yong, CEO of Yongnam, said: “We are pleased to report yet another set of solid results this quarter. Our strong order book of S$480 million provides the Group with earnings visibility and we will continue to build on this to propel our future growth.” 

For the nine months ended September 30, 2011 (“9MFY2011”), net profit was 17.1% higher at S$46.9 million as compared to S$40.0 million for 9MFY2010, according to a Yongnam report. 

Performance Review
Strong contributions from the Marina Coastal Expressway, MRT Downtown Line 2, MRT North-South Line Extension and the Hong Kong MTR projects boosted Specialist Civil Engineering (“SCE”) revenue to S$47.6 million, 60.5% higher than the revenue of S$29.7 million in 3QFY2010. The SCE segment accounted for 55.0% of total revenue for 3QFY2011. Structural Steelworks (“SS”) recorded a decrease of 23.9% in revenue, from S$51.1 million in 3QFY2010 to S$38.9 million in 3QFY2011 due to the substantial completion of the remaining projects at Marina Bay Sands Integrated Resort in FY2010 and the completion of Gardens by the Bay in June 2011. During the quarter, on-going projects like Vista Xchange at One-North, NUH Medical Centre, International Cruise Terminal and Mumbai International Airport were the key contributors to SS revenue, which accounted for 45.0% of total revenue for 3QFY2011.

Due to higher Group revenue as well as increased contributions from the higher margin SCE segment, gross profit increased 17.1%, from S$22.3 million in 3QFY2010 to S$26.1 million in 3QFY2011. Net profit increased 23.3% to S$16.8 million in 3QFY2011, from S$13.7 million in 3QFY2010. General and administrative expenses for 3QFY2010 included a write back of provision for a call on performance bond of S$1.4 million. Excluding this write back, general and administrative expenses would have increased by S$2.0 million, largely due to increased staff costs and lower foreign exchange gains in 3QFY2011. Share of results of joint venture increased by S$1.9 million due to improved performance.

For 9MFY2011, gross profit rose 6.0% to S$75.3 million while net profit posted a jump of 17.1% to S$46.9 million.
The Group maintains a strong balance sheet with cash and bank balances of approximately S$12.1 million. Earnings per share grew 21.8% from 1.10 Singapore cents in 3QFY2010 to 1.34 Singapore cents in 3QFY2011. The Group’s net gearing improved from 0.49 times as at December 31, 2010 to 0.41 times as at September 30, 2011. Net asset value per share increased by 15.4%, from 18.92 Singapore cents as at December 31, 2010 to 21.83 cents as at September 30, 2011.

Outlook
Prospects for the Group continue to be promising. Yongnam recently secured five new projects worth a total of S$54.1 million comprising two Specialised Civil Engineering contracts for the MRT Downtown Line 3 and three Structural Steelworks contracts for the Sports Hub, Asia Square Tower 2, Victoria Theatre and Victoria Concert Hall.

“The global macro-economic outlook is uncertain. However, the underlying fundamentals of our industry remain sound, with countries in the region continuing to roll out infrastructure projects, spurred on by the increasing trend of urbanisation in Asia. In Singapore, there is a healthy pipeline of potential projects, including the MRT Downtown Line 3 as well as other commercial projects. We are actively pursuing infrastructural projects like MRT projects as well as commercial projects in Hong Kong, Malaysia, India, Indonesia and the Middle East.

“With a solid performance for the first 9 months of FY2011 under our belt, together with a strong order book, we are optimistic that the Group will perform well in FY2011. Riding on our strong track record and proven execution capabilities, we are set to capitalise on the increased business opportunities,” Mr Seow added.