Singapore’s Big Loser of the Week: Yongmao Holdings Limited

Yongmao Holdings Limited (SGX: E6A) is this week’s big loser, as its shares declined 6.3% to S$0.15. It fared worse than the Straits Times Index (SGX: ^STI), which slipped 1.7%.

According to its website, Yongmao “designs and manufactures a wide range of tower cranes and tower-crane components and accessories”. It has manufacturing plants in China – Fushun City, Liaoning Province, and Beijing City.

On 27 May 2015, the tower crane manufacturer released its financial results for the year ended 31 March 2015 (FY 2015).

Revenue fell from RMB910m a year ago to RMB783m – a decline of 13.9% year-on-year due to weaker sales in China, which was partially offset by increased sales in Africa, Middle East, Europe and other countries in Asia. The lower turnover in China was due to weaker domestic demand on the back of a slowdown in property developments in several cities.

Gross profit declined 1.1% to RMB245m. However, gross profit margin improved from 27.3% to 31.3%, due to “higher contributions from oversea sales and rental and service income, as well as lower provision for stock obsolescence in FY2015”.

Despite the decline in revenue, net profit shot up 22.5% year-on-year to RMB63m. This was mainly due to a 255% surge in “Other Income” to RMB15m. Yongmao effected a restructuring exercise with Tat Hong Holdings Limited (SGX: T03) during the financial year and the resultant gain contributed RMB12m out of the RMB15m.

Executive Director and Group General Manager, Mr. Sun Tian, gave his thoughts on the general market in China and clued us in on what the firm will be doing going forward.

He said, “While the property market in China continues to be mired in uncertainty and demand remained sluggish, we anticipate the recent stimulus measures from the government will help support property market recovery and lift up construction equipment demands. The Group will also continue to expand its overseas operations in regions like the Middle East, Australia, Taiwan, Hong Kong and North America to diversify its risk across different geographic regions and to deliver sustainable growth for our shareholders.”

Shareholders should be delighted to note that a special dividend of 0.2 Singapore cents per share, on top of a final dividend of 0.6 cents per share will be dished out. This brings the total dividends to be given out for FY2015 to 0.8 cents per share, up from 0.5 cents per share declared a year back.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.