Tee International (Tee) reported 3QFY14 PATMI of S$0.57m which dipped 59% YoY due to a slower pace of recognition at ongoing projects and higher admin costs from the acquisition of Interlift Sales Pte Ltd. We judge this quarter to be a miss versus our expectations and will subsequently reduce our full year forecast. In terms of the topline, 3QFY14 revenue was S$37.4, down 30% again due to subdued progress at ongoing projects.

Total outstanding order book for the group now stands at a decent S$271m, of which S$196 is attributed to the engineering business and the remaining S$75m to the Telco and wastewater treatment businesses in Malaysia and Thailand. Tee also proposed an issue of 2 warrants for every 5 shares issue (exercise price of S$0.25 per warrant) which will see up to 197.2m warrants being issued to raise ~S$49.3m to strengthen the group’s capital base and support its expanding business activities. We would speak further with management about this set of results and, in the meantime, put our Buy rating and fair value estimate of S$0.35 UNDER REVIEW.

Source: OCBC Research - 11 Apr 2014