Revenue in the same period was up 17% y-o-y but down 11% q-o-q to $399 million.
Thanks to a better mix of higher-value products and some reversals of contract provisions, BRC Asia eked out a better gross profit margin of 8.9%, up 2 percentage points.
According to Ong and Tan, BRC Asia is seeing good prospects from the robust construction outlook.
Citing government statistics, construction demand in Singapore this year will further improve this year to reach between $34 and $37 billion, the highest level since 2015.
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Key projects include the Cross Island MRT Line, a higher level of public housing supply, the expansion of the two integrated resorts, and Changi Airport Terminal 5.
"Given BRC’s dominant market share in the reinforced steel industry, we believe the group is well positioned to ride on healthy industry tailwinds over 2024-26F," the analysts state.
They also like the stock for its 9% dividend yield and "undemanding" valuation of just 6x 2025 earnings, 0.5 standard deviations below its 2018-23 mean.
Their target price of $2.30 is based on 1.4x FY2024 P/BV.
Potential re-rating catalysts include continued healthy construction demand in Singapore and improvement in labour productivity.
Downside risks, on the other hand, include inability to pass on elevated labour costs resulting in pressured margins, global economic slowdown resulting in reduced contract awards, and counterparty credit risks.
