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>
<p>SMALL/MID CAP HIGHLIGHTS</p>
<h2>BRC Asia (BRC SP)</h2>
<p><strong>FY19: Building On A Resilient Foundation</strong></p>
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<p><strong>BRC reported FY19 net profit of S$31.6m (+162% yoy), beating our expectations at 105% of our forecast. The group declared a dividend of 8 S cents (3 S cents special dividend). Given the strong earnings visbiliity, a similar DPS in FY20 would provide an attractive yield of 5.4%. Further upside may come from a stronger public housing segment. Maintain BUY and target price of S$1.75</strong>.</p>
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<li><strong>4QFY19 net profit of S$10.9m, beating estimates.</strong> BRC Asia (BRC) reported 4QFY19 net profit of S$10.9m, down 35% yoy on a high base. FY19 net profit of S$31.6m soared 157% yoy on contribution from Lee Metal, and forms 105% of our estimate.</li>
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<li><strong>Positive dividend surprise. </strong>BRC announced a final dividend of 8 S cents (3 S cents in special dividend), compared to the minimum expectation of 5 S cents. The group paid 1 S cent in FY18. Excluding the special dividend, this represents a payout ratio of 36% of net profit (59% payout including special dividend). To recap, the group has previously committed to a minimum of 30% dividend payout for FY20.</li>
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<li><strong>Operating margins on the recovery.</strong> For 4QFY19, operating margin was 6.1% (+0.7ppt qoq) on a trajectory of recovery since the start of the year. The group continues to benefit from better margins and cost synergies from bulk raw material purchases after its acquisition of Lee Metal in 2018. Administrative expense was down 3% yoy in FY19 due to one-off legal and professional fees incurred in FY18. However, finance costs rose due to increased raw material purchases to meet higher sales volume for the enlarged group.</li>
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<p><strong>Strong balance sheet and cash flow</strong>. Net asset value was S$262.9m as at end-FY19, with operating cash flow before working capital more than doubled to S$58.4m. The group continued to pare down debt, with net gearing at 100% in FY19 (FY18: 125%).</p>
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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)
FY19: Building On A Resilient Foundation




BRC reported FY19 net profit of S$31.6m (+162% yoy), beating our expectations at 105% of our forecast. The group declared a dividend of 8 S cents (3 S cents special dividend). Given the strong earnings visbiliity, a similar DPS in FY20 would provide an attractive yield of 5.4%. Further upside may come from a stronger public housing segment. Maintain BUY and target price of S$1.75.









4QFY19 net profit of S$10.9m, beating estimates. BRC Asia (BRC) reported 4QFY19 net profit of S$10.9m, down 35% yoy on a high base. FY19 net profit of S$31.6m soared 157% yoy on contribution from Lee Metal, and forms 105% of our estimate.






Positive dividend surprise. BRC announced a final dividend of 8 S cents (3 S cents in special dividend), compared to the minimum expectation of 5 S cents. The group paid 1 S cent in FY18. Excluding the special dividend, this represents a payout ratio of 36% of net profit (59% payout including special dividend). To recap, the group has previously committed to a minimum of 30% dividend payout for FY20.






Operating margins on the recovery. For 4QFY19, operating margin was 6.1% (+0.7ppt qoq) on a trajectory of recovery since the start of the year. The group continues to benefit from better margins and cost synergies from bulk raw material purchases after its acquisition of Lee Metal in 2018. Administrative expense was down 3% yoy in FY19 due to one-off legal and professional fees incurred in FY18. However, finance costs rose due to increased raw material purchases to meet higher sales volume for the enlarged group.





Strong balance sheet and cash flow. Net asset value was S$262.9m as at end-FY19, with operating cash flow before working capital more than doubled to S$58.4m. The group continued to pare down debt, with net gearing at 100% in FY19 (FY18: 125%).



















Non-SGX Report: BRC Asia (BRC SP): FY19: Building On A Resilient Foundation

BRC Asia Ltd

Non-SGX Report: BRC Asia (BRC SP): FY19: Building On A Resilient Foundation