CSC Holdings Limited: Financial Analysis for Six Months Ended 30 September 2024 – Net Profit Growth 166.8%

Business Description

CSC Holdings Limited is a Singapore-based company primarily involved in piling works, civil engineering works, trading and leasing of heavy foundation equipment, soil investigation, and surveying works. The Group operates through two main segments: Foundation and Geotechnical Engineering and Sale and Lease of Equipment. Its geographic footprint spans across Singapore, Malaysia, India, Thailand, Philippines, Vietnam, and other regions.

Industry Position and Market Share

CSC Holdings Limited operates within the construction and engineering industry. It competes with other companies providing similar engineering and equipment services. The company appears to have a solid presence in its core markets, particularly in Singapore and Malaysia, and is working to expand its footprint in emerging markets such as India and Vietnam.

Revenue Streams and Customer Base

The company’s revenue is primarily derived from construction contracts and trading of building products and equipment. For the six months ended 30 September 2024, revenue from contracts with customers totaled \$148,181,000, and rental income contributed \$6,312,000. The customer base is diverse, spanning multiple regions, which helps mitigate geographic-specific risks.

Competitive Advantage

CSC Holdings Limited’s competitive advantage lies in its comprehensive service offering in the foundation and geotechnical engineering space, along with its ability to supply and lease specialized equipment. This positions the company well to meet the needs of large-scale infrastructure projects.

Financial Statement Analysis

Income Statement

The company reported a net profit of \$2,497,000 for the six months ended 30 September 2024, compared to a net loss of \$3,740,000 in the prior period. This represents a significant turnaround and net profit growth of approximately 166.8% [[5]]. Revenue increased to \$154,493,000 from \$146,426,000 in the previous year [[5]].

Balance Sheet

As of 30 September 2024, the company’s total assets were \$387,431,000, up from \$372,321,000 as of 31 March 2024 [[4]]. Total equity increased to \$106,852,000 from \$105,306,000 as of 31 March 2024 [[4]]. However, the company has a higher level of current liabilities (\$224,044,000) than current assets (\$217,963,000), indicating a potential liquidity risk [[4]].

Cash Flow Statement

The company generated \$5,348,000 in net cash from operating activities, compared to \$6,746,000 in the previous year [[10]]. Net cash used in investing activities was \$(763,000), primarily due to the acquisition of property, plant, and equipment [[10]]. Net cash used in financing activities was \$(9,554,000), mainly due to repayment of bank loans and lease liabilities [[10]].

Dividends

No interim dividends were paid by the company in respect of the six months ended 30 September 2024 [[18]].

Key Findings

Strengths

• Significant net profit growth of 166.8% compared to the previous period [[5]].
• Increased revenue and improved gross profit margins [[5]].
• Diversified revenue streams and geographic presence [[14]].

Risks

• Current liabilities exceed current assets, indicating potential liquidity risks [[4]].
• High level of debt and interest expenses impacting net finance costs [[5]].

Special Activities

The company entered into a joint venture agreement with X-Max Pte. Ltd. in August 2024 to form THL Max Foundation International Pte. Ltd., aimed at expanding their market presence [[25]].

Recommendations

For Current Investors

Given the company’s significant net profit growth and efforts to expand its market presence, it may be prudent to hold onto the stock. However, investors should closely monitor the company’s liquidity position and debt levels.

For Potential Investors

Potential investors may consider buying the stock, given the company’s recent turnaround in profitability and strategic initiatives to expand its market footprint. However, they should be cautious of the liquidity risks and debt levels.

Disclaimer

The recommendations provided are based on the financial information available as of 30 September 2024. Investors are advised to perform their own due diligence and consider their financial situation and investment goals before making any investment decisions.