Kwan Yong Holdings Limited

<5 PE, S$93.7m cash, growing 19% next year, dividends, riding a decade long public sector construction boom

Kwan Yong Holdings is a pure¹ Singapore construction play focused on building educational institutions and medical facilities and is making inroads into public housing. This focus synchronizes with a government plan to build 27 new residential hubs in the next 10 to 15 years.

In January 2020, KYH completed its listing on the HKSE at an offer price of HKD 0.65. It traded up to HKD 1.15 as the pandemic unfolded before postponed education and healthcare development plans in Singapore weighed on the company for several years. The company is now rerating back in the direction of its pre-pandemic high.

Today, KYH boasts record revenues (S$239.9m), order book (~S$770m) and EPS (S$0.016) and an improved financial position. According to the company’s latest results, it will recognize approximately 19% more revenue next financial year and has 2.5 years of visible earnings in its order book.

KYH’s valuation is superficially attractive relative to many well known favorites such as OKP Holdings, Soilbuild Construction and Huationg Global. However, there are many more reasons for liking this idea. This post will discuss the company’s customer concentration, track record, order book, tender book, Singapore’s development plans, and other points that struck me as distinguishing KYH from its peers.

A draft was circulated to paid subscribers and other supporters before publication, and while I benefitted from their input all errors are entirely my own. If you would like to receive these ideas before they are made public, upgrade to a paid subscription today. I also take calls with founding members to walk them through the thesis.

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Let’s dive in.