Hock Lian Seng (J2T) H2 2023 earnings summary

Executive summary

• FY2023 revenue rose 41.6% YoY to S$202.0m and net profit increased to S$26.6m, driven by civil engineering progress and industrial unit sales.

• EPS rose to 5.2 cents from 3.2 cents; year-end cash and cash equivalents were S$132.5m.

Financial highlights

• Gross profit increased 123% YoY to S$23.2m; other income rose to S$15.0m, including S$2.3m higher interest income and a S$1.1m arbitration legal-cost award.

• Profit before tax was S$30.9m vs S$19.5m; net profit was S$26.6m vs S$16.4m, and income tax expense was S$4.2m vs S$3.1m.

• Operating cash flow was an outflow of S$6.2m vs an inflow of S$51.1m; investing activities generated S$34.3m, including S$38.0m repayment from a joint venture.

• Total assets were S$341.0m, liabilities S$81.9m and equity S$259.1m at year-end; cash and short-term deposits were S$132.5m.

Outlook and guidance

• Civil engineering order book was S$708m at 31 Dec 2023, mainly Aviation Park and Serangoon North station contracts; the Changi Airport joint venture project was expected to complete in H1 2024.

• Singapore construction demand is forecast at S$32bn–S$38bn in 2024 and S$31bn–S$38bn annually in 2025–2028; public sector expected to provide 55% of 2024 demand.

• Management plans to pursue public civil engineering contracts, market remaining Shine @ TuasSouth units and take a cautious approach to new opportunities.