Interesting company.
Positive EBIT but yet negative ROIC. How is this possible? The denominator is negative.
Unlike many of its peers, Soilbuild is highly capital light, has low corporate overhead but trades at distress levels.
Soilbuild Construction
Corporate Overhead Margin: 2.7%
EBIT Margin: 7.0%
ROIC: 35.7%
EV/EBIT: 4.62x
However I would like to highlight that EBIT margin has been trending downwards, from ~11% in Q4 2012 to 7% in Q3 2014. Quite large a margin compression.
TA Corporation
Corporate Overhead Margin: 7.9%
EBIT Margin: 10.0%
ROIC: 2.6%
EV/EBIT: 11x
Net Debt/EBITDA: 6.2x
I believe TA Corporation is the closest comparable to Soilbuild construction but yet they trade at such different levels.
Similar to Soilbuild Construction, TA Corp had seen margin compression from 14.6% in Q4 2011 to 10% in Q3 2014.
As I do not have much to contribute to the future of the Singapore property market, I believe that a pair trade would be the most appropriate.
Long Soilbuild, short TA Corp.
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