Last Friday I managed to snap up some lots of Yongnam at my target price of $0.240 after a few failed attempts the previous days. I bought on weakness after Yongnam reported their disappointing third-quarter results. Yongnam reported an increased in revenue but their gross profit was down 55.2% due to cost overrun of 3 existing projects and a one time off disposal of fixed assets (pipe piles) which set them back $8.1mil. In short, they suffered a $3.4mil loss which put them in the red. However, Yongnam's gearing remained healthy at 0.48 times. Its cash and cash equivalents also increased from S$13.51mil to S$16.33mil in the corresponding quarter last year, albeit due to lower capital expenditure and higher borrowings.
Yongnam carries a dividend yield of around 4.1%. Its NAV is about S$0.2585 so I'm happy to buy it at a discount and I'm confident its price will only pick up from here as regional infrastructural developments and projects continue to have a strong demand in 2014 and beyond. Yongnam's financial fundamentals remain sound and I feel they still have lots of room for growth and expansion hence, my decision to buy into this company.
Just yesterday, Yongnam announced that they secured a structural steel subcontract worth S$168mil at Marina One, a mixed-use development located at Marina South, Singapore’s new Central Business District. This subcontract is a record win for Yongnam bringing their order book to S$397mil. After the news was released, Yongnam share price increased by 6.25% and closed at $0.255.
