Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

<p><em><strong>These equity research reports are not written by the SGX.</strong> SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p><div>
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<p>SMALL/MID CAP HIGHLIGHTS</p>
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<h2>BRC Asia (BRC SP)</h2>
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<p><strong>2QFY20: Gradual Return To Work</strong></p>
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<p><strong>BRC’s 2QFY20 core profit of S$10m is in line with expectations, although the group expects an dverse impact from the circuit breaker period with a stop in construction activities. Recovery would likely be gradual given the elevated numbers of foreign workers infected with COVID-19, as well as the safety measures in place for work to resume. However, the large proportion of public infrastructure projects is a good safety net. Maintain BUY with a lower PE-based target price of S$1.52.</strong></p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/151/076/original/image_37610633861596740329916.png?1596740331" class="editor-image img-responsive" data-smartkarma-image-id="151076"></figure>
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<p><strong>RESULTS</strong></p>
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<li><strong>2QFY20 net profit up 86% yoy</strong>. BRC Asia’s (BRC) reported 2QFY20 earnings of S$10m is in line with expectations, with 1HFY20 earnings of S$22.7m forming 68% of our full-year estimates. However, the group expects adverse direct financial impact on its performance due to the Circuit Breaker measures.</li>
<li><strong>Revenue slightly lower</strong>. Despite the higher sales volume, the group reported revenue of S$458.6m for 1HFY20, 2% lower compared with 1HFY19 due to lower ASPs. The direct impact of COVID-19 during 2QFY20 mainly lies in production, as the group’s manufacturing operations in Senai, Johor had remained closed in conjunction with the Malaysian government's Movement Control Order (MCO).</li>
<li><strong>Gross margins down, but held up relatively well.</strong> Gross margins for 2QFY20 came in at 10.9% (13.1%, -2.2ppt qoq). The group continues to benefit from cost synergies from bulk raw material purchases. BRC also recorded an allowance for expected credit losses on trade receivables. The impairment for the quarter amounted to S$2.9m, a larger quantum compared with 1QFY20.</li>
<li><strong>Orderbook held steady.</strong> BRC’s orderbook stood at S$980m (1QFY20: S$900m). A larger proportion of contracts comprises of public infrastructure projects.</li>
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These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.



SMALL/MID CAP HIGHLIGHTS




BRC Asia (BRC SP)




2QFY20: Gradual Return To Work




BRC’s 2QFY20 core profit of S$10m is in line with expectations, although the group expects an dverse impact from the circuit breaker period with a stop in construction activities. Recovery would likely be gradual given the elevated numbers of foreign workers infected with COVID-19, as well as the safety measures in place for work to resume. However, the large proportion of public infrastructure projects is a good safety net. Maintain BUY with a lower PE-based target price of S$1.52.





RESULTS





2QFY20 net profit up 86% yoy. BRC Asia’s (BRC) reported 2QFY20 earnings of S$10m is in line with expectations, with 1HFY20 earnings of S$22.7m forming 68% of our full-year estimates. However, the group expects adverse direct financial impact on its performance due to the Circuit Breaker measures.
Revenue slightly lower. Despite the higher sales volume, the group reported revenue of S$458.6m for 1HFY20, 2% lower compared with 1HFY19 due to lower ASPs. The direct impact of COVID-19 during 2QFY20 mainly lies in production, as the group’s manufacturing operations in Senai, Johor had remained closed in conjunction with the Malaysian government's Movement Control Order (MCO).
Gross margins down, but held up relatively well. Gross margins for 2QFY20 came in at 10.9% (13.1%, -2.2ppt qoq). The group continues to benefit from cost synergies from bulk raw material purchases. BRC also recorded an allowance for expected credit losses on trade receivables. The impairment for the quarter amounted to S$2.9m, a larger quantum compared with 1QFY20.
Orderbook held steady. BRC’s orderbook stood at S$980m (1QFY20: S$900m). A larger proportion of contracts comprises of public infrastructure projects.


























Non-SGX Report: BRC Asia (BRC SP): 2QFY20: Gradual Return To Work

BRC Asia Ltd

Non-SGX Report: BRC Asia (BRC SP): 2QFY20: Gradual Return To Work