“We expect Ever Glory to grow its order book from the increased number of private tenders in Singapore, such as schools, private condominiums, hotels and mixed-use developments,” Yik writes in his Aug 12 report, adding that the trailing 12-month contracts awarded in the city-state increased 68% y-o-y in May this year.
Yik also notes the company’s “impressive” track record of securing and completing several M&E contracts over the past five years. Such contracts include a $21.8 million industrial project at PSA’s maintenance base and a private residential project worth $7.3 million.
Over the past three years, the company was also able to deliver an average net profit margin of 10.8% over the past three years, which is “well above the low- to mid-single digit average typically seen among Singapore-listed construction companies”.
The acquisition of Guthrie Engineering, which was completed in July, will also bring about more tender opportunities for Ever Glory, says Yik. The former has a solid track record in various landmark projects such as Marina Bay Sands and Jewel Changi Airport.
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“The acquisition supports Ever Glory’s plans to grow its M&E engineering business and expand into switchboard and other manufacturing,” Yik writes. “We believe the acquisition would allow Ever Glory to bid for higher-value projects in the future, such as Changi Airport T5, Integrated Resorts, hospitals, and data centre projects in Singapore.”
The Building and Construction Authority’s (BCA) projected total construction demand of $39 billion to $46 billion annually from 2026 to 2029 is also a plus.
“At the midpoint of $42.5 billion, this is a 23% increase compared to the average construction contracts awarded from 2021-2024 at $34.5 billion,” Yik writes. “We believe the contracts awarded in the medium term are suitable for Ever Glory to tender.”
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The analyst is forecasting the company’s FY2025 earnings to be at $9.1 million with a dividend yield of 3.1%.
As at 2.58pm, shares in Ever Glory are trading flat at 5.7 cents, representing an FY2025 P/E of 22.5 times.
