CSC second quarter profit up 20% to $11.2min

The group’s stays healthy at $210mln behind improvement in Singapore’s construction sector.

Foundation and geotechnical engineering specialist, CSC Holdings Limited (CSC), has reported an 11% increase in revenue to $78.4 million for the three months ended 30 September 2010 (2Q FY11), compared to $70.4 million achieved in the previous corresponding period (2Q FY10). Revenue of $156.0 million for six months ended 30 September 2010 (1H FY11) was also 3% higher than revenue of $151.7 million reported in six months ended 30 September 2009 (1H FY10).

Competition in the industry in the last 1 year has resulted in lower margins for new projects secured. However, with the recovery of the construction sector, margins for the last quarter has held firm. The company managed to achieve a 20% sequential rise in gross profit, from $9.3 million in first quarter ended 30 June 2010 (1Q FY11) to $11.2 million in 2Q FY11. Gross profit margin also increased sequentially from 12% in 1Q FY11 to 14% in 2Q FY11, according to a CSC report.

Operating expenses (which comprises administrative, distribution and other operating expenses) in 2Q FY11 were sequentially higher at $6.7 million (1Q FY11: $5.2 million) in line with increased activities and higher distribution cost incurred for the sale of equipment on the Group’s equipment trading business.

Total shareholder’s equity stood at $193.6 million as at 30 September 2010, a 2% increase over $189.8 million as at 31 March 2010. Net asset value per ordinary share was 15.8 cents at 30 September 2010, up from 15.5 cents at 31 March 2010. The group ended the quarter with cash and cash equivalents of $34.2 million and a gearing ratio of 0.41.

Dividend
For the six months ended 30 September 2010, the Board of Directors has proposed an interim cash dividend of 0.4 cents per ordinary share (1H FY10: 0.2 cents). Total dividend payable amounts to approximately $4.9 million and this translates to a dividend payout ratio of about 57%.

Outlook
For 2010, Singapore’s economy remains firmly on track to deliver a sparkling performance, despite a slowdown in growth rate for the third quarter. In tandem with this, advance estimates by the Ministry of Trade and Industry also show that the construction sector expanded by 7% in the third quarter of calendar year 2010 compared to the same period a year ago.

In the past four months alone, the Group had secured more than $120 million worth of contracts. Some of these projects include the Changi Motorsports Hub, the redevelopment of Orchard Emerald, ITE College Central and Headquarters in Ang Mo Kio, a new Sentosa Gateway Tunnel in the HarbourFront area and redevelopment works for the Royal Thai Embassy at Orchard Road. Beyond Singapore, the foundation contracts secured include the National Cancer Centre in Kuala Lumpur, the second Penang Bridge, the Singapore International School in Bangkok, Thailand and bored piling works for an industrial complex in Long An Province near Ho Chi Minh City, Vietnam.

Demand seems to be improving as a steady stream of construction projects are expected to start in 2011. On the public sector side, these include Stage 3 of the MRT Downtown Line and the continued construction of more public housing in line with HDB’s building programme, school construction and upgrading programme and various other infrastructure projects.

Along with the recovering economy, several major private sector projects such as the South Beach mixed commercial development, the Singapore Sports Hub and other private residential projects are expected to commence in 2011. The Group will actively participate in submitting tenders for all these upcoming public and private sector projects.

As at 1 November 2010, the Group’s order book stands at a healthy $210 million (3 August 2010: $180 million).
The Board of Directors expects the Group’s performance in the second half of the financial year to be better than 1H FY11.