Bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria.

Monday, July 27, 2015

Sun Con: Q1 2015 Result

Sunway Construction group is going to list in few days time and the group just announced its first quarter result few days ago. 

It was a stable quarter for the group. Nothing special to mention on its income statement. No comparison data was given and I was little bit lazy to check back the bottom line contributed by the Construction group to Sunway group preceding quarter last year. 

Balance sheet was normal, just the trade payable dropped quite much.  

Operating cash flow was weak. It would be zero or negative if not for the dividend contribution from its associates and JV. 

What's interesting is still the segment reporting. 

It's clear and I think I mentioned in my previous post before that although the construction segment contributed a big amount to the group's revenue, but due to its lower profit margin, Precast segment contributed more to the group's bottom line. 

Operating profit margin for Construction and Precast were 3.21% and 23.4% respectively. 

Its precast concrete products are mainly supply to projects in Singapore. So, any slowdown in Singapore construction and property development will have great impact on the group's precast unit. 

I guess the media kept focusing on how many and how big the contracts can be awarded to the group. But since the profit margin is so low, any cost overrun or mis-estimation would get the group into trouble. 

Investors have to keep note of that :) 

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