Cheapest and biggest laggard stock in construction industry
Lim & Tan has a buy call on Tiong Woon with tp of 0.88, pegged to 40% discount to peers EV/EBITDA.
They highlight 3 key investment thesis for Tiong Woon Corp (TWC).
1. TWC is a regional heavyweight in the heavy lift industry, currently trading at a significantly undervalued level.
TWC is a lifting powerhouse that has competed successfully against the likes of international competitors such as Mammoet and Sarens by winning contracts against them. However, the market has failed to recognize TWC and has unfairly punished TWC's share price.
2. There exists a notable gap between the market's perception and reality regarding TWC's capabilities, which are on par with international industry giants, yet remain relatively unknown. This presents a strong potential for a re-rating.
The perception is that crane companies are unpopular and unexciting, which often results in investors not paying heed to the likes of TWC, resulting in an unfavoured company with extremely cheap valuations. However, as No.19 (previously No.22) in the world (according to InternationalCranes June 2023 article), TWC has the capabilities to compete effectively against world No.1 Mammoet and No.2 Sarens.
3. TWC stands out as one of the few publicly listed companies maintaining a positive outlook, driven by the upswing in the petrochemical and construction sectors within the region.
For the first time, TWC has mentioned that it "maintains a positive outlook" vs being "cautiously optimistic" 6 months ago. The reason for this positivity is due to "steady customer demand for its Heavy Lift and Haulage solutions, particularly in the petrochemical and construction sectors, as well as in key regional markets such as India, Saudi Arabia, and Thailand:.
Explanation: The regions that TWC operates in are facing tailwinds from the higher construction demand post-COVID, higher oil prices and Final Investment Decisions (FID) that were not present since 2014.
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