Towards Financial Freedom
BBR Holdings - Buoyed By Strong Construction Pipeline
- BBR's 4Q13 PATAMI more than doubled to SGD8.7m, boosted by progressive revenue recognized from Bliss @ Kovan. As the bulk of this project's construction will take place in FY14, coupled with a strong orderbook, FY14 is expected to be a good year. The outlook remains healthy, backed by a strong pipeline of government construction projects. Maintain BUY, with a TP of SGD0.35.
- FY14 to be a good year. BBR's current orderbook amounts to SGD905m, with a good portion expected to be completed in FY14. On top of that, its 92%-sold Bliss @ Kovan is expected to be 90% completed by end-FY14 (from 28% as at end-FY13), which would boost revenue for the year.
- Outlook beyond FY14 remains bright. BBR's JV project - the executive condominium at Yuang Ching - is expected to be launched in 4Q14. However, revenue from this development cannot be recognized until the project obtains temporary occupation permit (TOP), likely in 2017. Hence, with the bulk of Bliss @ Kovan completed by end-FY14, there is likely to be a dip in revenue from the property development segment in FY15. Revenue would likely come mainly from its construction projects, which are supported by the company's healthy orderbook and the pipeline of government projects.
- Unfazed by challenges. Construction costs are expected to continue to go up as labour costs increase. Given BBR's project management ability, management is of the view that it would be able to keep margins steady despite the potential challenges.
- Maintain BUY. Despite the lumpy nature of BBR's revenue stream, we remain positive on BBR, which has had a good track record of securing government construction projects. It would, therefore, benefit from the pipeline of government and related projects, such as the enhancement of the MRT network and the building of new terminals and runways at Changi Airport. BBR announced a dividend of SGD0.008/share for FY13, and management expects to be able to sustain this payout.
Source: OSK
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