Introduction to BRC Asia Limited
BRC Asia Limited is a renowned player in the industrial sector, specializing in the design, manufacture, and marketing of steel mesh under the prestigious BRC brand. Their product range includes non-standard and customized mesh alongside a variety of prefabricated products such as steel beams and column cages.
Stock Performance and Major Shareholders
As of the latest report, BRC Asia’s share was priced at S\$2.52, with a target price maintained at S\$2.52, reflecting a minimal upside of +0.1%. Esteel Enterprise P/L and Hong Leong Asia are the major shareholders, holding 61.2% and 20.0% respectively.
In terms of stock data, BRC Asia operates within the Industrials sector with a market cap standing at S\$691.4 million. The stock has seen a significant price performance over the year, peaking at S\$2.57 and dipping to a low of S\$1.71.
FY24 Financial Performance
BRC Asia reported a solid FY24 performance despite a decrease in revenue. The company achieved a notable increase in earnings to S\$93.5 million, up by 24% year-over-year. This growth was largely attributable to improved margins and a one-off gain of S\$16.5 million in the third quarter of FY24.
However, the fourth quarter of FY24 presented challenges with a decline in both revenue and PATMI by 24.2% and 22.3% respectively. These outcomes were influenced by lower steel prices and project delays impacting deliveries.
Future Outlook and Dividend Declaration
Looking forward, BRC Asia is optimistic about the future owing to its robust order book and potential recovery in the steel market. A significant order book valued at S\$1.4 billion at the end of 4QFY24 positions the company well for upcoming quarters.
The group declared a final dividend of 8.0 S cents per share along with a special dividend of 6.0 S cents per share, bringing the total FY24 dividend to 20.0 S cents per share. This marks an impressive FY24 dividend yield of 8.4%.
Strategic Position and Market Influence
BRC Asia is strategically poised to capitalize on the surge in public sector construction projects in Singapore. The company’s expertise in steel reinforcement aligns well with upcoming infrastructure developments like the Changi Airport Terminal 5 and Tuas Port developments.
The company is expected to benefit from a forecasted increase in global steel demand from 2025 onwards, driven by economic stimuli from major economies.
Earnings Revision and Valuation
UOB Kay Hian has adjusted its FY25-26 PATMI estimates slightly upwards by 1-4%, reflecting higher volume and margin assumptions. The valuation maintains a HOLD recommendation with an increased target price of S\$2.52.
Despite the attractive dividend yield, it is noted that BRC’s expected earnings growth is already priced into the current stock value, suggesting limited upside potential.
Conclusion and Share Price Catalysts
Key catalysts for BRC Asia’s share price include a faster-than-expected recovery in construction activities, additional public housing projects, and potential earnings-accretive acquisitions. The company’s strong market position offers a strategic advantage in Singapore’s thriving construction sector.
