BRC Asia Limited: FY2024 Financial Analysis – 23% Net Profit Growth

Business Description

BRC Asia Limited, incorporated in 1938, is a leading Pan-Asia prefabricated reinforcing steel solutions provider headquartered in Singapore. The company is listed on the Singapore Stock Exchange and operates in Singapore, Malaysia, and China with a total workforce of over 1,000 and an annual processing capacity of 1.2 million MT. BRC offers a suite of reinforcing steel products and services such as standard length rebar, cut and bend services, prefabrication services, and standard/customised welded wire mesh for the construction industry.

Industry Position and Competitors

BRC Asia Limited is a dominant player in the reinforcing steel fabrication industry in Singapore. The company faces competition from both local and international steel providers. Its strong market position is reinforced by its comprehensive product offerings and established footprint in key Asian markets.

Revenue Streams and Competitive Advantage

The company’s revenue streams are primarily from domestic and international steel fabrication and trading. BRC’s competitive advantage lies in its ability to transfer laborious and unproductive steel fixing work to factory fabrication, resulting in manpower savings, shorter construction cycles, and enhanced buildability and productivity.

Financial Statement Analysis

Income Statement

For FY2024, BRC Asia Limited achieved a record net profit of S\$93.5 million, a 23% increase from FY2023. Despite a 9% decline in revenue to S\$1.5 billion due to weaker steel prices, gross profit increased by 11% to S\$153.8 million, driven by higher-margin steel fabrication.

Balance Sheet

The company’s balance sheet remains strong, with cash and cash equivalents of S\$191.4 million as of 30 September 2024. The sales order book is approximately S\$1.4 billion, supporting its long-term growth prospects.

Cash Flow Statement

Details on the cash flow statement are not provided in the report, but the strong cash position indicates healthy liquidity management.

Dividend Information

BRC proposes a final cash dividend of 8 Singapore cents and a special dividend of 6 Singapore cents. Together with an interim dividend of 6 Singapore cents already paid, the total dividend for FY2024 is 20 Singapore cents, representing a payout ratio of 59% and a yield of 8.4%.

Key Findings

• Strengths: Record net profit growth, strong balance sheet, robust sales order book, and substantial dividend payout.
• Risks: Decline in global steel demand, weaker steel prices, and increased operating expenses.

Date of Report

The report is dated 21 November 2024 and covers the financial year ended 30 September 2024.

Special Activities

BRC is introducing automation tools like robotics into its factory operations to enhance operational efficiency and is well-positioned for a potential recovery in the global steel market.

Investment Recommendations

If you are currently holding BRC Asia Limited stock, it is recommended to maintain your position due to the company’s strong financial performance, robust order book, and substantial dividends. If you are not holding the stock, consider buying due to potential long-term growth prospects and market recovery.

Disclaimer: This analysis is based solely on the provided report and should not be considered as professional financial advice. Investors should conduct their own research or consult a financial advisor before making investment decisions.

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