Seah Kiin Peng, CEO of BRC Asia Ltd Image source: BRC Asia
BRC Asia, 6-year monthly chart with financial data
BRC Asia, 16-mth daily chart
Covid had placed a brake on SG Construction sector due to labour & materials shortages as well as various safe distancing measures which further reduced productivity.
With SG moving towards living with the virus and the gradual opening of borders, part of the labour shortages will be resolved and we reckon construction activities may ramp up to make up for the lost ground over the past 2 years.
BRC Asia Limited, listed on SGX since 2000, is an established pioneer in prefabricated steel reinforcement. In 2018, they acquired SGX-listed Lee Metal, and became the market leader in SG with more than 60% market share. Their operations and businesses today cover SG, Malaysia and China, supported by more than 1k employees.
The attached 1st chart showed the Monthly Chart of BRC Asia with its financial data. BRC Asia had experienced strong growth over the past 4 years with its revenue growing at a compound annualized rate of 39% and its EPS grew at 80% p.a. Mgt had rewarded its shareholders handsomely by paying out 75% of its Net Income as dividends, thus achieving a Dividend Yield of 8% in FY2021.
Even though its result is phenomenal, its share price didn’t move as much as its valuation suffered multiple compression, in part due to its over-valuation swing in 2017. As can be seen on the monthly chart, its Price-to-Sales ratio is currently trading at a very attractive level of 0.33x. In fact, since 2016, whenever it fell below P/S of 0.35x, its share price often trended upward.
On its (2nd) Daily Chart, its share price is trading within a tight range of 1.59-1.54 for the past one month. A really solid entry price is probably near the 1.49 level (if price action allows) as volume profile shows most accumulation at this level for the past 200 trading sessions. UOBKH's research dated 3 Mar 2022 has a 6-mth $2.02 target price.
As usual, kindly do your own due diligence & assess if the Technical Analysis opinions are applicable to your trading/investing needs. Brought to you by Thomas Ng’s Investment Ideas Broadcast Group.
As usual, this writeup was broadcast to Clients on 25 April 2021 but posted here only on 29 Apr 2021.
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