Tiong Seng hit with $7.9m headline loss in Q3

Construction revenue slipped 7.6%.

Tiong Seng reported headline losses of $7.9m for the third quarter, on back of a $18.5m impairment of its development properties in Suzhou and Tianjin.

Excluding this impairment, net profit would have been $10.4m, led by the recognition of variation revenue at the tail end of some projects.

According to Maybank Kim Eng, Tiong Seng’s revenue climbed 10% year-on-year to $162m, supported by recognition of China property sales. However, construction revenue slipped 7.6% year-on-year to $132m.

The report states that the decline in Tiong Seng’s construction revenue has been in line with the recent slowdown in Singapore construction sector.

“We expect construction revenue growth to be muted next year, led by slower private sector construction and a measured roll-out of public construction projects. We therefore do not see construction gross margin improvement (to 11%) as a fundamental change in cost structure. Margins should remain under pressure based on the following: 1) foreign worker levies have been revised to higher rates from July 2014; and 2) low-margin HDB projects are still ongoing,” noted Maybank Kim Eng.

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