Sunday, February 21, 2016

BBR Holding (S) Ltd - Significant Discount To Asset Value

Due to the extreme downtrend, I started looking at companies with asset value that are 50% more than their share price.

While searching, BBR Holdings (S) Ltd appeared in my list. 

Profile In Short

The BBR Holding (S) Ltd engages in the general construction, specialized engineering, and property development businesses. The company’s General Construction segment offers design and build, general building construction, and civil and structural engineering construction services. 

Its Specialized Engineering segment is involved in the construction engineering activities, including piling and foundation systems, post-tensioning, stay cable systems, heavy lifting, bridge design and construction, and maintenance repair and retrofitting, as well as prefabricated pre-finished volumetric modular construction activities. 

The company’s Property Development segment engages in the development of residential and mixed commercial properties. Its Green Technology segment is involved in the system integration and distribution of renewable energy; and supply, installation, and lease of solar panels and grid connected systems. 

The company primarily operates in Singapore, Malaysia, and the Philippines. BBR Holdings (S) Ltd was formerly known as BBR Construction Systems Pte Ltd. The company was founded in 1993 and is headquartered in Singapore.

Based on the Triple S Scorecard:

As expected - It failed. But the "Amended" Net Asset Value is about 39% higher than the current price. 


Why So Good?

Share Price is MUCH lower than Net Asset Value - If we look at the actual Net Asset Value of $0.4293, the share price is actually much lower than it by 60%! 

Prefabricated Pre-finished Volumetric Construction (PPVC) Ability - Singapore government is trying to promote efficiency and promote using pre-cast and pre-fab blocks to build building and HDB. The company is one of the five suppliers for PPVC in Singapore. Read here and here. Moderna Homes is a subsidiary of BBR Holdings (S) Ltd.

High Order Book - S$515 million in respect of construction projects, predominantly in Singapore and Malaysia! Just look at the pictures below.



Why So Bad?

Dropped in Revenue - This is linked to the recognisation of the projects. Despite having a high order book, the projects may have already been recognised significantly. Can I trust the order book being the full remainder sum?

Possibility of Increased Cost - We have no idea if the recent involvement of PPVC will increase its Cost of Goods in future.

Minimum Share Price on Mainboard Listing - There is a possibility of consolidation of the company if the share price continues to go down. If this happens, the liquidity of this stock will be affected. 

In Short

After a detailed analysis (despite failing Triple S Scorecard), I decided to buy the company mainly due to its discount to Net Asset Value. Once the economy recovers, retail investors will be able to recognise this undervalued gem. Furthermore the order book will still be able to sustain the revenue and net profit for a while.

As per summarize by GFG on Valuebuddies:


Current Price: 0.161 as of 21 Feb 2016

Please do your own due diligence before you invest in this stock.

Do note the author is vested in this stock/company at 0.165.

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