Towards Financial Freedom
BBR - Better 2H Seen As Projects Pick Up Speed
BBR's 2Q13 PATMI was 4.7% lower y-o-y at SGD2.8m, even as revenue jumped 76.5% to SGD104.3m, largely due to lower margins from existing projects and lower revenue from property development. While it has a healthy orderbook, BBR is facing cost pressures amid moderate economic growth. That said, BBR's capabilities put it in good stead to secure new projects. Maintain BUY.
- To recognize profits from property development in 3Q13. BBR expects its Bliss @Kovan project (92%-sold) to be at least 20% completed by end-3Q13, whereupon it would start recognizing the profits from this project (including those relating to the completion of the initial 20%). Thus this would boost PATMI and margins from 3Q13. As the project involves property development, there was zero margin from this division in 2Q13. This dragged down the company's overall gross margin to 6.6% (from 14.6% in 2Q12).
- More activity from property development. BBR and its JV partners were recently awarded a 217,298.4 sq ft piece of land by the HDB. This leasehold land is slated for the development of a 500-unit executive condominium (EC). BBR has a 35% stake in this JV. Management expects to launch the project in 2014, with temporary occupation permit (TOP) expected to be obtained in 2016.
Source: OSK
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