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TA Corporation Takes In Stride Housing Measures
Corporate Digest | 25 October 2012
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By: Choo Hao Xiang
Articles (151) Profile

It has not been that long since TA Corporation (TA Corp) went public. Coming to its first year anniversary on the Singapore Exchange, the property and construction group specialising in the middle and upper middle market recently saw its share price achieve a record high. Earlier this month, the share price of the company hit $0.365. Coupled with the dividend per share of $0.012 dished out for the previous financial year, a handsome return of 34.6 percent would have been yielded if subscription of its shares were made at its initial public offering issue price of $0.28 in November last year. The company is currently trading at around $0.35.

Of course it was not ripple-less for TA Corp. Following the announcement of the additional buyer’s stamp duty in December, sentiment towards the property sector suffered a huge blow. The share price of TA Corp was slashed down to as low as $0.205 during that period. However, a steady recovery has been staged since then.

TA Corp’s Share Price Performance Against The Straits Times Index

Needless to say, the gradual hike in price has had interests in TA Corp propped up too. Compared to earlier in the year when less than 500,000 of shares were exchanged daily, trading volume of the counter for the past two-month period easily went over the one million mark.

Equally excited was chief executive officer of TA Corp, Neo Tiam Boon whom Shares Investment met up with recently. Lighting up the conference room with his bubbly nature, Neo was obviously very enthusiastic with what his company has in the pipeline as he brought us up to speed the developments at TA Corp.

Biggest Contract
“The award of tender for the residential site at Dairy Farm Road is our most sizeable deal yet for our real estate arm,” Neo beamed. The project he was referring to encompasses a mid-range condominium that houses roughly 400 units. “You can expect a very unique project coming up. Part of this site is located inside Bukit Timah Nature Reserve. As such, residents will get to enjoy the lush greenery,” Neo added.

Going into this project, there is one strategy the company is sticking to – teaming up with partners. The latest job will see the company collaborate with Hock Lian Seng Holdings, King Wan Corporation and Far East Distillers. The parties had purchased a 99-year leasehold land parcel covering 188,863 square feet for $244.3 million. Accordingly, TA Corp will hold a 25 percent interest in the abovementioned job.

The adoption of this approach which is evident in many previous real estate contracts the company participated in, has allowed TA Corp to position itself so as to avoid head-on competition with the “big boys” in the real estate segment and more importantly still profit from these ventures.

When asked what were his views on the recent property cooling measures announced by the Monetary Authority of Singapore (MAS), “it was a good introduction” was his response. “You may have a bit of a knee-jerk reaction. But at the end of the day, investors will be reminded not to overcommit as the low interest rate environment will not last forever.”

Record Year In The Making
For the six-month period ended 30 June 2012 (1H12), TA Corp chalked up a stunning performance. Broad-based growth in both its real estate development and construction businesses lifted results. Revenue surged 63.5 percent to $182.2 million while net profit was 61.7 percent higher at $23.8 million. With these figures representing 64 percent and 85.1 percent of FY11 results, it seems like the odds are favouring TA Corp to surpass its performance last year.

Partly underpinning such earnings visibility is its robust order book. As at 30 June, an aggregate $695.9 million worth of jobs is scheduled to be recognised over the next two to three years. The order book has not taken into account the project at Dairy Farm Road.

TA Corp has also taken steps to diversify its business. In September, TA Corp invested $2.8 million to make its foray into the distribution of high performance motor oils and lubricants through the acquisition of Sino Tac Resources. The purchase will augment the company’s income stream as the exclusive distributor of British Petroleum’s lubricating fluids is estimated to add $10 million in revenue annually. “We foresee a huge potential on the regional front. Sino Tac Resources will provide the company with a strong platform for future growth in major markets in Southeast Asia,” Neo elaborated.

With all that said, a monstrous shackle on the property sector seems to have taken shape with a firm message from the MAS that has place long term stability in the property market as key. Then again, if the level of demand spotted at the preview of the company’s residential development, the 77-unit Gambir Ridge, is anything to go by, there is probably nothing much for TA Corp to worry about.

TA Corp’s Financial Performances

Haoxiang manages and oversees the portfolio of stocks in the consumer goods and hospitality sectors at Shares Investment.

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TA Corp  -- -- --   
Business: Co is engaged in the construction industry as well as the devt & sale of residential & other types of ppties. [FY17 Turnover] Construction (67.8%), real estate invs (7.3%) real estate devt (13.1%) & distribution & others (11.8%).

Insight: Nov-18, 9M18 revenue fell 41.9% to $92.4m mainly a... Read More
Hock Lian Seng Hldgs  -- -- --   
Business: [FY18 Turnover] Civil engineering (97.1%), property development (2.8%), investment properties (0.1%).

Insight: May-19, 1Q19 revenue rose 15.3% contributed mainly... Read More
King Wan Corp  -- -- --   
Business: Integrated building services and mechanical and electrical (M&E) engineering specialist. [FY19 Turnover] Plumbing & sanitary (58.6%), electrical (36.3%), toilet rental (3.3%), investment holdings (1.8%).

Insight: May-19, FY19 revenue dipped 3.1% to $79.3m. Corres... Read More

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