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Yongnam
Dec 17, 2014 16:14:42 GMT 7
Post by roberto on Dec 17, 2014 16:14:42 GMT 7
Hi all,
Anyone care to share their thoughts on Yongnam? Currently seems to be a mere shadow of its past, with it's performance largely tied to ability to secure projects. Even after announcing recent projects (Myanmar Airport, Changi Jewel), it's price spiked only to return to its recent lows.
Also, I'm unsure what to make of it's recent sale of land/building.
I have a position at 22 cents.
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Post by oldman on Dec 18, 2014 4:11:24 GMT 7
Took a very quick look. 14,000 shareholders. 74% in public hands. Supply and demand can swing quickly. I think the pictures below explain my thoughts. Good luck.    Hi all, Anyone care to share their thoughts on Yongnam? Currently seems to be a mere shadow of its past, with it's performance largely tied to ability to secure projects. Even after announcing recent projects (Myanmar Airport, Changi Jewel), it's price spiked only to return to its recent lows. Also, I'm unsure what to make of it's recent sale of land/building. I have a position at 22 cents. |
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Post by pain on Dec 18, 2014 10:44:46 GMT 7
Many years ago, I was with Takenaka Corporation on the Changi Airport Terminal 1 Finger Piers Extension Project. Yes, Yongnam is one of the subcontractors specialising on the structural steel beams installations. As a Main Contractor, our profit margin was razor thin and whatever was left farmed out to other subcontractors. - Weak Profit Margin - Skeleton profitCash flow wise, Yongnam ranked similar to other subcontractors but lower than Main Subcontractor. Hence, their claims will be dependent upon when CIAS released the money to Main Con after paying off the Main Subcon - Cash flow must be strongYongnam will need a huge inventory of I-beams and thus affected severely by iron steel prices. As their contracts are lump sum based, Yongnam is unable to claim for any price rise. Hence, their profits for the projects are not smooth. When Yongnam projects a profit for the project, the end result can be a loss due to some factors such as site delay, architectural consultant changes, etc.. Though, Variation Orders can be claimed from Main Contractor, however in reality, you may claim 70% or lesser due to deductions and sometimes co-sharing of the costs, etc.. People who are in the Construction Industry will know well what I mentioned.- Inconsistent profit / lossesIn terms of labour, the skill sets required are quite exacting. The installers must not be afraid of heights, welding / brazing, riveting skills, etc.. Previously, all their foremans and workers are Malaysians commanding well over S$100 per day. Yes, they are paid very much higher than the normal construction workers. Maybe now it is different with Bangladesh workers, I am not sure. Last few years, construction boom and labour shortage will result in Yongnam facing difficulties getting the workers with the right skill sets. - High Labour Cost with Specialised skillsetBased on my work experience, I will not take any position on Yongnam though it is severely discounted based on NTA vs Price. Disclaimer: Do take note the above is solely my opinion and should not be taken to initiate / disengage a position in the share market. Took a very quick look. 14,000 shareholders. 74% in public hands. Supply and demand can swing quickly. I think the pictures below explain my thoughts. Good luck. Hi all, Anyone care to share their thoughts on Yongnam? Currently seems to be a mere shadow of its past, with it's performance largely tied to ability to secure projects. Even after announcing recent projects (Myanmar Airport, Changi Jewel), it's price spiked only to return to its recent lows. Also, I'm unsure what to make of it's recent sale of land/building. I have a position at 22 cents. |
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Post by oldman on Dec 18, 2014 10:54:07 GMT 7
Thanks for sharing. It is from postings like yours that I learn more about an industry than any industry conference and of course, more than even a face to face with the CEO. Sounds like construction companies are best listed than held privately. In other words, I am unlikely to be investing in construction companies.  Many years ago, I was with Takenaka Corporation on the Changi Airport Terminal 1 Finger Piers Extension Project. Yes, Yongnam is one of the subcontractors specialising on the structural steel beams installations. As a Main Contractor, our profit margin was razor thin and whatever was left farmed out to other subcontractors. - Weak Profit Margin - Skeleton profitCash flow wise, Yongnam ranked similar to other subcontractors but lower than Main Subcontractor. Hence, their claims will be dependent upon when CIAS released the money to Main Con after paying off the Main Subcon - Cash flow must be strongYongnam will need a huge inventory of I-beams and thus affected severely by iron steel prices. As their contracts are lump sum based, Yongnam is unable to claim for any price rise. Hence, their profits for the projects are not smooth. When Yongnam projects a profit for the project, the end result can be a loss due to some factors such as site delay, architectural consultant changes, etc.. Though, Variation Orders can be claimed from Main Contractor, however in reality, you may claim 70% or lesser due to deductions and sometimes co-sharing of the costs, etc.. People who are in the Construction Industry will know well what I mentioned.- Inconsistent profit / lossesIn terms of labour, the skill sets required are quite exacting. The installers must not be afraid of heights, welding / brazing, riveting skills, etc.. Previously, all their foremans and workers are Malaysians commanding well over S$100 per day. Yes, they are paid very much higher than the normal construction workers. Maybe now it is different with Bangladesh workers, I am not sure. Last few years, construction boom and labour shortage will result in Yongnam facing difficulties getting the workers with the right skill sets. - High Labour Cost with Specialised skillsetBased on my work experience, I will not take any position on Yongnam though it is severely discounted based on NTA vs Price. Disclaimer: Do take note the above is solely my opinion and should not be taken to initiate / disengage a position in the share market. Took a very quick look. 14,000 shareholders. 74% in public hands. Supply and demand can swing quickly. I think the pictures below explain my thoughts. Good luck. |
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Post by roberto on Dec 18, 2014 23:23:41 GMT 7
Thanks ossan for the thoughts, and pain for your valuable insights into the construction industry. Now I'm looking to get out, hehe. For the moment I shall remain patient.
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Post by roberto on Aug 1, 2015 16:21:56 GMT 7
A quick review. After consolidation (4 to 1), the supposed strong support at 88 cents (22 * 4 = 88) was broken and price descended lower and lower. Large float, sunset industry and downtrend are damn good reasons not to get involved on the long side.  |
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Post by oldman on Aug 1, 2015 17:00:46 GMT 7
Consolidation sucks up supply and makes the shares more vulnerable to 'targeted' actions.... which usually means downward pressure on the consolidated shares..... even more so, if liquidity was already a problem pre-consolidation. When volume declines, those stuck with shares may feel more and more vulnerable as the price falls further. A quick review. After consolidation (4 to 1), the supposed strong support at 88 cents (22 * 4 = 88) was broken and price descended lower and lower. Large float, sunset industry and downtrend are damn good reasons not to get involved on the long side. |
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Post by zuolun on Aug 3, 2015 9:25:44 GMT 7
oldman, This is a real bad situation for people who're highly leveraged in 'targeted' stocks which suddenly become illiquid due to the SGX-share consolidation solution.In Chinese, it is known as 有价无市 meaning — "There is no market price."Consolidation sucks up supply and makes the shares more vulnerable to 'targeted' actions.... which usually means downward pressure on the consolidated shares..... even more so, if liquidity was already a problem pre-consolidation. When volume declines, those stuck with shares may feel more and more vulnerable as the price falls further. A quick review. After consolidation (4 to 1), the supposed strong support at 88 cents (22 * 4 = 88) was broken and price descended lower and lower. Large float, sunset industry and downtrend are damn good reasons not to get involved on the long side.
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