Yongnam's profits fell 28.6% to $8.6m

But revenue soared 47.5%.

According to OSK, Yongnam's 2Q13 PATMI was 28.6% lower yo-y at SGD8.6m. Stripping out this provision, 2Q13 PATMI would have risen 13.3%.

Here's more:

Yongnam 47.5% y-o-y revenue growth to SGD115.1m in 2Q13. This was mainly due to significant revenue growth at its Structural Steelwork division, which overshadowed the 2.5% y-o-y decline in revenue from the Specialist Civil Engineering division as the Marina Coastal Expressway projects were substantially completed at end FY12.

Gross margin was 19.4% in 2Q13, compared with 26.3% in 2Q12, due to a number of lower margin contracts secured and lower revenue mix. Included in 2Q13 was a provision of SGD5.1m exposure to Alpine Bau GmbH for work done on some stations of the Downtown Line 2 MRT.

YNH’s orderbook stands at SGD266m as at end 2Q13. With a pipeline of SGD1.3bn worth of projects (both locally and overseas) yet to be awarded,

Management is optimistic of its prospects. It expects to secure some of these projects in 2H13 and at better margins. It maintains that it would not sacrifice margins just to secure a contract.

Management guided that margins in 2H13 are likely to remain low. YNH has not received any update on its tender for the two Myanmar airport projects, although it expects a result to be known soon. We do not have a rating on this stock.

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