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A Quick Screen: Ley Choon(Q0X.SI)

A Quick Screen: Ley Choon(Q0X.SI)

This column is written by @calvinwee
-Calvin is a fundamental analyst at heart and an ardent disciple of value investing. He relishes the process of searching for undervalued stocks and enjoys collecting dividends from his stocks.

Brief Background
Ley Choon Group Holdings Limited (Ley Choon) is an established one-stop underground utilities infrastructure construction and road works service provider. It business segments includes
1) Underground utilities infrastructure construction and maintenance services,
2) Road and airfield pavement construction and maintenance services,
3) Construction materials supply services

Performance Summary
FY16 was a challenging year for Ley Choon as it reported a gross loss of $22.4 million due to provision for liquidated damages and foreseeable losses for additional work to be performed for certain ongoing projects.In the absence of the above factors, the Group would have reported a revenue and gross profit of approximately S$151 million and S$22 million respectively, and a corresponding gross profit margin of 14.6%.
In view of its financial difficulties, Ley Choon have engaged Professional Advisors to restructure its debe obligations and divest its non-core assets to reduce borrowings and strengthen the balance sheet The divestment of non-core assets and businesses is envisaged to reduce overall borrowings by approximately S$30 million. In addition, the Group has also embarked on an optimization program for its operational asset base, where under-utilized assets are identified and disposed to recycle capital.
Sheng Siong’s strategy change in the recent 6 years

Sheng Siong’s strategy change in the recent 6 years

Given the fierce competition in Singapore’s retail supermarket industry, Sheng Siong is facing the threat from powerful competitors and the fear of declining market share. During the time period of 2008-2010, Sheng Siong put their emphasis on consolidation, upgrades and renovation of their existing outlets. This explained why Sheng Siong merely opened one new store in each year of 2008 and 2009, and did not add any outlet into the brand in 2010. The financial year of 2011 is important for Sheng Siong, the firm launched the e-commerce project and adopted strategy of expansion in both local and overseas market.

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