For its 1HFY2025 ended March, the steel supplier reported revenue that was 5.6% lower y-o-y no thanks to lower prices. However, earnings in the same period was up 9.2% y-o-y thanks to higher-than-expected other income and lower finance and operating costs.
Even so, BRC Asia maintained its half-year dividend at 6 cents per share - a level which UOB Kay Hian analysts Llelleythan Tan Yi Rong and Heidi Mo expect can be maintained.
For the whole of FY2025, they are projecting a total payout of 20 cents, which implies an "attractive" annualised yield of 6.4%.
"With its dominant domestic market share, BRC serves as a strong proxy for Singapore's construction sector," state the analysts.
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Tan and Mo have raised their near-term earnings forecasts from $80.6 million to $96 million for FY2025 and from $88.1 million to $110 million for FY2027.
By applying the same 9x FY25F PE multiple, pegged to +1 sd of BRC Asia's five-year average mean, they have derived a higher target price of $3.29 from $2.76.
Nonetheless, they figure that at current levels, BRC Asia is already fully valued and thus they have kept their "hold" call.
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"We recommend investors to take profit on any potential strength in share price performance," they add.
In his separate note, Yik Ban Chong of PhillipCapital, who has kept his "accumulate" call, says that BRC Asia is set for revenue growth with the impending acquisition of a 55% stake in Malaysia-based Southern Steel Mesh for $18.2 million.
Taking into account better visibility of orders, Chong has lowered his WACC assumptions from 11.6% to 11% in valuing the counter, leading to a higher target price of $3.40 from $3.15.
