PhillipCapital analyst Terence Chua has kept his “buy” call and $2.26 target price on BRC Asia, following the steel supplier’s 9MFY2022 earnings for the period ended June that met his expectations.
Chua’s target price is pegged to 8x FY2022 earnings estimates.
On Aug 2, the company reported earnings of $20.4 million for 3QFY2022 ended June, more than double the year-earlier period, thanks to a recovery in the construction sector but somewhat offset by a moderation of prices.
BRC Asia’a order book from construction clients was up slightly to $1.135 billion for 3QFY2022, up slightly from $1 billion as of 2QFY2022.
“Strong demand for public housing and infrastructure projects in Singapore continued to drive up the group’s order books," says Chua.
"BRC Asia is benefitting from the backlog of projects that were postponed during the Covid-19 pandemic and the higher number of public housing projects that are being launched to meet demand,” he adds.
On the other hand, Chua notes that construction activity levels have been affected by a spate of fatal accidents. A total of 28 deaths were reported in the first six months of the year. The stop work orders as a result have impeded construction progress, says Chua.
For the time being, Chua has kept his FY2022 and FY2023 earnings unchanged, on expectations that construction activity will continue to recover in these two years.
BRC Asia closed at $1.72 on Aug 8, up 0.58%.
