Yongnam Holdings (Maybank)

Positive NDR affirms our conviction BUY

High interest level in this Asian infrastructure play.

concluded non-deal roadshow (NDR) in Singapore drew high levels of

interest from institutional fund managers. The Asian infrastructure

theme was of relevance, given the unprecedented boom and Yongnam

represents a high quality play, given its regional market leading position

in structural steel and strutting.Our recently

Bullish on resumption of contract wins.

was a weak year, with an estimated SGD240m vs recent historical

range of SGD300-SGD500m. We believe this represents a tactical

decision of not compromising on margins rather than a structural

decline. Management expects the resumption of major contract wins in

the 2In terms of order wins, FY12nd half of this year, which we think will be positive stock catalysts.

Free-cash flow to improve substantially.

our thesis that free cash flow will improve substantially from this year,

with the cessation of a major 5-year capex cycle from FY08-FY12. With

a naturally cash-generative business and net capex reducing to

SGD25m a year, we estimate free-cash-flow yield of 18% by FY15F.

Management believes existing capacity is supportive of revenue up to

SGD500m, which would represent 75-80% utilisation.Management agreed with

First step to Myanmar.

proposal for a BOT project to expand the existing Yangon International

Airport (YIA). Given the urgency of the project, tender results could be

known within two months. This is a separate bid to build the new

Hanthawaddy International Airport (HIA). With a potent mix of technical

strengths and government relationships, we believe this consortium is

amongst the front-runners for both projects.Yongnam’s consortium has submitted the

BN victory is positive. Reiterate BUY.

government’s victory in Malaysia, the massive MRT project in Kuala

Lumpur is likely to progress with minimum delay. We think Yongnam

has a very high chance of securing work. We reiterate BUY ahead of

2H13, which is shaping up to be an interesting period with major

contract win catalysts in store. Our TP of SGD0.45 is pegged to 10X

FY13F PER, with 81% of FY13 revenue backed by orderbook schedule.With the incumbent

Yongnam Holdings – Summary Earnings Table Source: Maybank KE

FY DEC (SGD m) 2011 2012 2013F 2014F 2015F

Revenue 332.7 301.6 381.1 353.5 366.7

EBITDA 99.1 76.9 95.3 99.9 113.6

Recurring Net Profit 63.4 43.5 57.0 62.7 74.8

Recurring EPS (SG cents) 5.1 3.5 4.5 5.0 5.9

DPS (SG cents) 1.0 1.0 1.2 1.3 1.5

PER (x) 6.3 9.1 7.0 6.3 5.3

EV/EBITDA (x) 3.1 3.8 3.0 3.3 3.4

Div Yield (%) 3.2 3.2 3.9 4.3 4.7

P/BV (x) 1.4 1.2 1.1 1.0 0.9

ROE (%) 21.7 13.5 15.6 15.3 16.0

ROA (%) 11.8 7.6 8.9 10.2 11.3

Consensus Net Profit 56.9 58.9 70.2