In a business update on Aug 4, steel supplier BRC Asia BEC has reported earnings of $22.6 million for its 3QFY2023 ended June 30, versus $20.4 million recorded in the year earlier quarter.
Revenue in the same period was $459.9 million, down from $515.3 million reported for 3QFY2022.
This brings 9MFY2023 earnings to $48.8 million versus $60.2 million recorded for 9MFY2022.
As of June 30, the company has built up an order book of $1.34 billion, to be delivered for use in construction projects over the coming five years.
In his earnings commentary, CEO Seah Kiin Peng notes that construction activity has recovered following the slump during the pandemic.
Specifically, contracts awarded in the civil engineering and residential segments have largely returned to pre-Covid levels, led by a ramp up in public housing projects.
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Seah notes that the strong local demand bodes well for demand for what BRC Asia sells.
However, he warns that "recent business failures of some main contractors" is a "stark reminder" that there are still uncompleted, loss-making projects from the pre-pandemic days and that "they continue to test the financial resilience and mettle of their builders severely."
"In this regard, BRC Asia will continue to exercise robust due diligence to minimise our exposure," adds Seah.
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BRC Asia shares closed Aug 4 at $1.67, up 0.6% for the day but down 7.22% year to date. At this level, BRC Asia trades at around 6x earnings and gives a yield of 6.59%.
