STEEL-solutions provider BRC Asia recorded a S$20.4 million net profit for Q3 ended Jun 30, 2022, double its S$10.2 million net profit in the year before.

 

Revenue for the quarter rose to S$515.3 million, up from S$340.2 million a year ago, the company said in a business update. BRC&rsquo s order book was about S$1.1 billion as of end-June.

 

The company' s net profit for the 9 months ended Jun 30 stood at S$60.2 million, more than double the S$29.3 million the year before. Its revenue for the same period rose to S$1.3 billion from S$832.9 million year on year.

 

BRC noted that the local construction sector grew 3.8 per cent in the second quarter, &ldquo faster&rdquo than the 1.8 per cent expansion in the preceding quarter. This was in part due to the relaxation of border restrictions on the inflow of migrant workers, it added.

 

It pointed out that construction site activity levels were &ldquo adversely&rdquo affected during the quarter due to 2 &ldquo transient&rdquo issues: a safety time-out from May 9 due to the rising number of workplace fatalities, and a spate of stop-work orders as a result of the high number of dengue cases, which impeded project progress.

 

Said BRC: &ldquo Be that as it may, with the ending of government Covid-19 support measures for the local construction industry and a rising-interest-rate environment, we are of the view that credit risk remains elevated in the local construction industry.&rdquo

 

It added that &ldquo persistently high&rdquo input costs should continue to pose &ldquo significant&rdquo challenges to businesses in this sector.

 

On the other hand, BRC noted that construction order books island-wide have remained &ldquo robust on the back of strong demand&rdquo for public housing and infrastructure projects, as Singapore continues to emerge from the Covid-19 pandemic.

 

&ldquo This bodes well for the demand for reinforcing steel and BRC, which are an integral part of the local construction supply chain,&rdquo it said.

PHILLIP Securities Research on Friday (May 20) raised its target price on BRC Asia : BEC -0.59% to S$2.26 from S$1.84, following the fast recovery of the construction sector. It maintained a &ldquo buy&rdquo call on the counter.

 

The new target price is 8 times the brokerage&rsquo s estimates for FY2022 earnings, and is still a 15 per cent discount to BRC Asia' s 10-year historical average.

 

The S$2.26 target price also implies a potential upside of 34.5 per cent from BRC&rsquo s Friday trading price of S$1.68 as at 3.30 pm. The counter was up S$0.01 or 0.6 per cent at the time.

 

The research team noted that BRC&rsquo s revenue and net profit for the first half of 2022 had exceeded expectations. The beat came from faster-than-expected recovery of the construction sector. As such, Phillip Securities raised its estimates for BRC&rsquo s FY2022 earnings by 37 per cent.

 

BRC also benefitted from a S$1.8 million net reversal for onerous contracts in H1 as contracts were fulfilled, though this was offset by additional provisions made for deliveries beyond the timeframe.

 

The brokerage expects provisions for onerous contracts to remain elevated for FY22 and FY23 earnings estimates, considering the rise in steel prices. The metal&rsquo s price has gained 18 per cent to S$1,300 per tonne since the start of the Russia-Ukraine conflict this year.

 

Despite concerns over supply chain disruptions from China&rsquo s lockdowns and the rise in raw material prices, Phillip Securities believes the construction sector&rsquo s recovery remains on track with government support cushioning the impact of external factors.

 

This is evident during the group&rsquo s second quarter. Provision for impairment loss on trade receivables fell over 60 per cent year on year, aided by government support and the recovering construction sector.

 

While the brokerage anticipates net gearing to remain elevated with higher steel rebar prices, it is not overly worried about the uptick as the bulk of BRC&rsquo s short-term loans and borrowings are letter of credit and treasury receipts used to fund inventory purchase for order fulfilment.

 

&ldquo With an approximately 65 per cent market share in the reinforced steel industry, we continue to see BRC Asia as a key beneficiary of the construction sector recovery,&rdquo Chua said.

 

BRC on May 11 reported a 108 per cent increase in net profit to S$39.8 million year on year for the first half of the year. Following the rise in deliveries and steel prices, the group' s revenue increased by 61 per cent year on year to S$793.3 million.

 

BRC also declared an interim dividend of S$0.06 for the first half of the year, which signalled the company&rsquo s confidence in the near-term outlook of the group, said Chua.

BRC Asia has reported earnings of $39.8 million for the 1HFY2022 ended March, 108% higher than net profit of $19.2 million in the same period the year before.

 

Earnings per share (EPS) for the period stood at 14.65 cents, higher than the 8.08 cents in the 1HFY2021.

 

Revenue for the half-year period increased by 61% y-o-y to $793.3 million in line with the higher deliveries and higher steel prices.

 

Volume growth was driven by the low base due to the shutdown of the construction sector during the circuit breaker period in 2020.

 

Steel prices have increased by at least 40% during the comparative growth, which contributed to the significant revenue growth.

 

During the same period, the group&rsquo s gross profit increased by 73% y-o-y to $68.8 million, with net profit margin of 5.0%, 1.1 percentage points higher y-o-y.

 

A net reversal of $1.8 million was made in the 1HFY2022 out of the recorded provision for onerous contracts of $46.1 million at the beginning of the financial period. The reversal of provision for onerous contracts were attributed to reversal of provisions made as at Sept 30, 2021 for deliveries in 1H FY2022, partly offset by additional provisions for deliveries beyond March 31.

 

For the 1HFY2022, BRC declared a dividend of six cents for the period, up two cents from the four cents per share in the 1HFY2021.

 

As at end-March, cash and cash equivalents stood at $140.0 million.

 

" This is a good set of half-year results, and we would like to thank shareholders for their continuing support by locking in an interim dividend of six cents for 1HFY2022,&rdquo says Seah Kiin Peng, CEO of the group.

 

&ldquo The local construction sector has continued to recover well amidst Singapore' s resolute re-opening, and while we can expect stability on this front, external factors are weighing downs the pace of the sector' s recovery somewhat. Covid-19 spikes in China and its strict Covid strategy have caused global supply chain disruptions through lockdowns and port traffic delays,&rdquo he continues.

 

&ldquo The ongoing Russia-Ukraine conflict is also adding a layer of uncertainty in the markets, particularly on commodities and energy. Nevertheless, we should expect these macro issues to sort themselves out in the next 12 months. For BRC, our focus is on the fine-tuning of our processes and products through further mechanisation and digitisation to better serve our customers with our just-in-time total reinforcing steel solutions."

 

As at March 31, the group&rsquo s order book stood at $1.0 billion, to be delivered progressively in the next five years.

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STEEL solutions provide BRC Asia recorded S$13.3 million in net profit for the first quarter ended Dec 31, 2021, up 38.8 per cent from the year-ago period.

 

Revenue for the quarter stood at S$375 million, up 67.5 per cent from the S$213 million it posted a year ago, the company said in a business update on Wednesday (Feb 9).

 

As at Dec 31 last year, its sales order book stood at approximately S$1.3 billion. The duration of projects in the order book ranges up to 5 years.

 

The company noted that Singapore' s total construction demand for 2022, as reported by the Building and Construction Authority, is expected to fall between S$27 billion and S$32 billion, " substantially more" than 2020' s S$21 billion.

 

Sixty per cent of this demand is expected to come from the public sector.

 

A steady level of construction demand, coupled with the backlog of work created by the Covid-19 pandemic, is expected to raise total nominal construction output to up to S$32 billion for the year.

 

" This bodes well for reinforcing steel and BRC going forward, which are an integral part of the local construction supply chain," said BRC' s chief executive officer Seah Kiin Peng in the update.

STEEL-solutions provider BRC Asia recorded a S$10.2 million net profit for Q3 ended June, reversing its loss of S$2.5 million a year ago, thanks to the recovery in the construction sector.

 

BRC' s revenue for the quarter surged to S$340.2 million, up from S$36.6 million a year ago. The dramatic rise was due to the low base effect last year, when the circuit breaker to curb the spread of the coronavirus led to the suspension of construction activities. BRC' s order book was about S$1.1 billion as of end-June.

 

The company' s net profit for the nine months ended June stood at S$29.3 million, up 46 per cent from a year earlier. Its revenue for the same period was up 68 per cent to S$832.9 million, with other income rising 42 per cent to S$6.7 million due to fair-value changes on derivatives.

 

Its operating expenses inched down 4 per cent, partly due to lower finance costs amid lower interest rates. However, BRC' s 9M gross margins came in at a lower 6.9 per cent, compared to 10.3 per cent a year ago. This was due to provisions for " onerous contracts" of S$40.4 million, it said.

 

" These provisions should be reversed when deliveries under such sales contracts are executed, or when the contractual obligations no longer exist, or when the costs to meet the obligations no longer exceed the sales value," the company added.

 

BRC also recorded a provision for an impairment loss on trade receivables of S$3 million. Trade receivables rose amid higher sales after the circuit breaker ended.

 

Looking ahead, BRC remains cautious. It said: " While it is encouraging to see a broad-based recovery for the construction sector, recovery to pre-pandemic levels could be impeded by any re-tightening of foreign labour supply by the Singapore government and border controls, as the Covid-19 situation remains fluid."

 

The sector continues to suffer a foreign labour crunch and a greater number of foreign workers looking to return to their home countries, it added.

 

Malaysia' s third movement control order (MCO 3.0), implemented to control the spread of the virus, has also disrupted the production of precast concrete components. The progress of some Singapore construction sites could be affected if MCO 3.0 continues.

 

" In the longer run, this pandemic may also have seeded certain substantial structural changes to how the sector operates," said BRC chief executive Seah Kiin Peng. He added that the company will strive to stay ahead of the changes.

 

- BRC had a strong 2Q21 (Mar). Revenue rose 30.9% qoq, and 20.5% yoy, benefitted from ramp up in order deliveries and higher steel prices. Steel rebar prices are 5.8% higher YTD and 51.4% yoy.

 

- Recent spike in virus community cases had clouded the outlook. BRC is still expected to have good 3Q21 yoy growth due to weak 3Q20.

 

- We are lowering FY21E net earnings estimates by 17%, with order fulfillments pushed out to the following year. Downgrade to HOLD with unchanged target price of S$1.64

 

MAINBOARD-LISTED steel-reinforcement solutions provider BRC Asia net profit fell 15 per cent to S$19.2 million for the half-year ended March 31, 2021, due to lower operating profit margins.

 

Revenue was up 7 per cent to S$492.7 million due to the S$38.4 million gain from the sale of a development property at Nassim Road as well as higher selling prices uplifted by increases in steel prices.

 

Excluding the sale of property, revenue for the first half would have been comparable to that of the same period in the previous year.

 

Earnings per share was 8.08 Singapore cents versus 9.71 cents the previous year. An interim dividend of four Singapore cents was declared for the half year.

 

For the quarter, net profit was down 5 per cent to S$9.5 million while revenue rose 20 per cent to S$279.3 million. Earnings per share for the quarter was 3.97 Singapore cents versus 4.27 cents in the same period the previous year.

 

As at 31 March 2021, the group' s net assets stood at S$283.1 million with a net asset value per ordinary share of 116.35 Singapore cents, compared with with S$264.6 million and 113.38 Singapore cents respectively, as at September 30, 2020.

 

Despite the a higher projected construction demand by the Building and Construction Authority, the group expects some of its customers to be more adversely impacted by the current lower efficiency and work productivity, as well as heightened costs due to Covid-19 measures in place.

 

It will, however, remain focused on mitigating any negative impact through prudence and vigilance in credit control, it said in a press statement.

 

Said chief executive officer of the group Seah Kiin Peng :" The Covid-19 pandemic continues to be fluid but we remain cautiously optimistic about our business prospects. As general economic activity begins to recover from the severe disruptions seen in 2020, we expect to see broad base improvements to Singapore' s construction demand and output in 2021 and beyond."

 

MAINBOARD-LISTED steel-reinforcement solutions provider BRC Asia has reported a 24 per cent decline in net profit for its fiscal first quarter on the back of lower revenue, and provisions.

 

In a business update on Wednesday, it said that its net profit for the three months ended Dec 31, 2020 fell to S$9.6 million from S$12.7 million in the year before, after recording provisions of S$13.2 million.

 

The provisions included S$7.9 million for onerous contracts recorded during the quarter, compared to a reversal of S$6.3 million in the year-ago period, from " sharp increases in global steel prices during the quarter" .

 

Earnings per share fell 24 per cent to 4.12 Singapore cents, from 5.45 cents previously.

 

Revenue for Q1 FY2021 fell 6 per cent to S$213.4 million, mainly due to a reduction in sales volume, as Covid-19 safe-working and management measures continued to result in a slower pace of work for the construction sector, BRC said.

 

The company' s chief executive officer, Seah Kiin Peng, said BRC has been focused on mitigating the negative impact on business arising from Covid-19 for the past year.

 

He noted that the group remains in good financial shape, with a recent placement used to repay outstanding bank borrowings, thus strengthening the group' s balance sheet.

 

The group' s net asset value per ordinary share rose to 117.23 Singapore cents as at Dec 31, 2020, from 113.38 cents as at Sept 30, 2020. BRC' s sales order book stood at approximately S$1.09 billion as at Dec 31, 2020.

 

Mr Seah added: " In line with Phase 3 of Singapore' s re-opening and a national effort to vaccinate the Singapore population, we remain cautiously optimistic towards the recovery of general economic activity and are confident that BRC will navigate through this trying time."