SINGAPORE (Aug 1): BRC Asia, the provider of steel reinforcement solutions, says it expects to report higher profits for 3Q19 and 9M19 ended June.
In a filing on Wednesday night, BRC Asia says the stronger bottomline for both periods come on the back of commercial and cost synergies from its acquisition of Lee Metal Group (LMG), as well as an improving business environment.
The improved financial performance contrasts against its 3Q18 performance which saw the group report a loss of $7.7 million primarily due to provisions for onerous contracts and impairment of receivables resulting from the acquisition of LMG.
The group however advised shareholders and investors to exercise caution when dealing in the shares of the company. BC Asia is expected to announced its unaudited financial results for 3Q19 and 9M19 on or before Aug 14.
To be sure, analysts are now more positive on the outlook of BRC Asia following its acquisition of LMG, saying the group is now Singapore’s largest steel reinforcement supplier with a dominant market share.
Singapore’s Building and Construction Authority (BCA) has projected a pickup in progress payments from $27 million in 2018 to between $28 million and $30 million in 2019 given the expected recovery in the construction sector after the downturn in 2015 to 2017.
As at end March, BRC Asia’s orders on hand stood at $750 million and but is expected to rise given the strong pipeline of public and private construction projects waiting in line to be awarded.
In a July 25 report, SAC Advisors’ Terence Chua is initiating coverage on BRC Asia with a “buy” call and target price of $1.71 with a dividend yield of 3.8% for FY19. The group is also achieved a CAGR of 50.6% in net profit over the next three years as well as higher revenues of $918.5 million for FY19, a 62% increase from FY18. New order wins are expected to hit $950 million.
As at 11.19am, shares at BRC Asia are trading flat at $1.35.
