This Stock Attracts First Notice From UOB Kay Hian, Year-To-Date Gain 51%

THE CONTEXT &bull   Tai Sin Electric' s stock (59 cents) has done well this year, gaining 51% year-to-date with most of the gain happening in 3Q when it popped 45%, as investors increasingly recognised its fundamentals anchored in the construction boom and proliferation of data centres in Singapore and Malaysia.    &bull   Tai Sin provides the wires that power and connect critical systems in infrastructure and data centers, ensuring electricity flows, data moves, and safety is maintained. Its products are like the veins and nerves of these projects.     FY Interim (ct) Final (ct) Total Dividend (ct) 2021 0.75 1.5 2.25 2022 0.75 1.6 2.35 2023 0.75 1.6 2.35 2024 0.75 1.6 2.35 2025 0.75 1.6 2.35 &bull UOB Kay Hian today put out a non-rated report on the company, which has a consistent dividend payout in recent years (see table). Tai Sin did not increase it despite a record profit for FY25 (ended June), likely due to higher working capital needs as business volume goes up. &bull While its stock has done well of late, it lags behind that of its Malaysian peer, Southern Cable Group which has gained  94%  year-to-date and trades at  26X PE  compared to Tai Sin' s 10X. (See:  Construction Boom Powers Electrical Cable Manufacturers, S' pore Player Trades at Half The PE of M' sia' s) Read more below...

Excerpts from UOB KH report
Analyst:  Roy Chen, CFA

Tai Sin Electric (TSE SP)
 

Powering Singapore&rsquo s Landmarks And Beyond Highlights &bull TSE is a market-leading supplier of electrical cables and wires in Singapore. &bull It is a key beneficiary of the upbeat infrastructure demand in the region. &bull TSE trades at a benign 10.2x FY25 PE, offering a consistent over 4% yield.

 

Analysis

&bull   A diversified regional industrial group with core strengths in electrical cable & wire manufacturing. Tai Sin Electric (TSE) is one of the leading electrical cable and wire (C& W) manufacturers in Southeast Asia with production bases in Singapore, Malaysia and Vietnam that support sales across the region.

In FY25, C& W contributed to 86% of TSE&rsquo s operating profit.

Through its other subsidiaries, TSE also:

a) carries and distributes a wide range of third-party electrical products in Singapore, supporting the needs of local contractors and manufacturers b) provides independent testing and inspection services for construction projects in Singapore, Malaysia, and Indonesia and c) manufactures electrical switchboards in Brunei.

&bull   A major supplier to Singapore&rsquo s key infrastructure and iconic landmarks.  TSE is a trusted brand with a leading market share of the cable and wire supplies in Singapore.

TSE&rsquo s cable and wires are widely used in Singapore&rsquo s key infrastructure including MRT lines, Changi Airport, and Tuas Mega Port.

It is also a primary supplier to many of Singapore&rsquo s iconic landmarks such as Jewel at Changi, Gardens by the Bay, and Resorts World Sentosa.

TSE supplies to over 70% of data centres in Singapore.

&bull TSE&rsquo s core competitive advantages include:

a) its sizeable local production facility that can cater to large and mega projects while offering superior logistics experiences (short turnaround time and multiple deliveries within a day) b) its strong project track record and c) its &ldquo tri-axis&rdquo production bases in Singapore, Malaysia and Vietnam that ensure supply resilience.

 

Financial review

 
TSE has been consistently profitable for 28 years since its listing in 1998, though its profits and margins may fluctuate with infrastructure development cycles and copper prices. 
 

Tai Sin stock price	59.5 cents
52-week range	38-59.5 c
Market cap	S$271 M
PE	9.9
Dividend yield	4.1%
P/B	1.2
52-week change	45%

While TSE routinely hedges a portion of copper demand after a project is entered, its contract margins may still be somewhat eroded if copper prices sharply rise.

This happened during the pandemic when the supply chain was severely disrupted, resulting in TSE ending up with onerous contracts (older contracts that were entered when copper prices were low) that dragged its financial performance in FY23-24.

With the onerous contracts largely depleted, TSE&rsquo s net profit was more normalised in FY25, reaching a record-high level of  S$25.9m  (+78% yoy).

&bull   Outlook:  Geared to the region&rsquo s upbeat infrastructure development.

TSE would continue to benefit from the upbeat infrastructure demand in Singapore, including new MRT Lines, Changi Airport T5, the Paya Lebar Air Base relocation, the Marina Bay Sands integrated expansion, the East Coast &ldquo Long Island&rdquo , and the Woodlands Regional Centre projects.

TSE is also a key beneficiary of the data centre boom in Malaysia, with many new data centres being built in south Johor Bahru, close to TSE&rsquo s Malaysian production facility.
 

Bottomline   &bull Trading at a benign 10.2x FY25 PE and offering a 4.1% yield.  TSE&rsquo s FY25 PE stands at a discount to construction sector peers&rsquo average of 12.7x.  Roy Chen, CFA, analystTSE maintains a healthy balance sheet with a 21% net gearing at end-FY25.  Share Price Catalyst a)Organic earnings growth driven by upbeat infrastructure investments in the region, b) possible dividend increases, and c) bolt-on acquisitions.

 

Tai Sin Electric is proposing to purchase the entire issue share capital of BayWa r.e. Solar Systems Co and BayWa r.e. Solar Systems Corporation, which are incorporated in Thailand and the Philippines respectively.

 

The consideration amount for the sale shares is US$12.3 million, or about $15.7 million. This is made up of US$5.7 million in sale shares amount US$4.2 million which is an amount of intra-group loan for the Thai target and US$2.5 million which is an amount of intra-group loan for the Philippines target.

 

The consideration also includes a leakage adjustment amount in US dollars, which is an amount to be agreed between Tai Sin and the seller, inter alia any dividend or distribution or other return of capital declared.

 

The completion of the sale is expected to take place on Nov 3, and will be funded by internal sources of Tai Sin and by way of external financing from bank loans.

 

Tai Sin says that the proposed acquisitions are in line with its strategy to expand into sustainable and future-oriented businesses, and will enable the group to capitalize on the growth potential of the green energy sector in Southeast Asia.