Brokers' take

Yongnam Holdings > Add CGS CIMB Research, March 15 March 16 close: S$0.31 Target price: S$0.57

TOGETHER with Leighton Contractors, Yongnam has been shortlisted as the potential contractor for the design and construction of the North-South Corridor (tunnel) between Kampong Java Road and Suffolk Walk. The JV submitted the lowest bid of S$553.8 million.

We expect net margins for the main contractor to be in the single-digit range. Earnings contribution will be recognised via equity accounting and would only be significant in 2019-21F, based on our estimates. Gross margins for strutting work would be around 20 per cent.