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ZKX

ZKX

$0.745 SGD 284M market cap 22 February 2026
Ever Glory United Holdings Limited ZKX BUFFETT / MUNGER / KLARMAN SUMMARY
1 SNAPSHOT
Price$0.745
Market CapSGD 284M
EVSGD 276M
Net DebtSGD -8.1M
Shares381.5M
2 BUSINESS

Ever Glory United Holdings is a Singapore-based mechanical and electrical (M&E) engineering contractor providing ACMV, electrical, fire protection, plumbing, and integrated building services for public and private sector construction projects. The company was founded in 2018, listed on SGX Catalist in May 2023, and transferred to SGX Mainboard in December 2025. In July 2025, it acquired Guthrie Engineering for S$46M, transforming its scale and project capabilities.

Revenue: SGD 74.7M Organic Growth: 57.3%
3 MOAT NARROW

BCA L6 grading for electrical engineering and integrated building services allows tendering for unlimited-value public sector projects. ~30 years combined founder experience and established relationships with developers and main contractors. Post-Guthrie scale enables pursuit of mega-projects (Changi T5, MBS expansion). However, M&E contracting is fundamentally a commodity business with low switching costs and limited pricing power.

4 MANAGEMENT
CEO: Xu Ruibing (since 2018, co-founder)

Aggressive acquisitive growth strategy: Fire-Guard (S$4.3M, Feb 2024), Guthrie Engineering (S$46M, Jul 2025). Modest dividends (S$3M in FY2024, yield <0.5%). Small share buybacks (S$0.43M). Frequent bonus share issues (3 since IPO). Issued S$5M convertible bonds and S$17M placement. Strong organic growth from S$19M to S$75M revenue in 3 years.

5 ECONOMICS
10.3% Op Margin
16.7% ROIC
SGD 9.2M FCF
-0.8x (net cash) Debt/EBITDA
6 VALUATION
FCF/ShareSGD 0.024
FCF Yield3.3%
DCF RangeSGD 0.50 - 0.70

FY2026E revenue S$200M (full Guthrie), 8-10% net margin, 12% discount rate, 3% terminal growth. Shares outstanding ~381M (pre-further dilution).

7 MUNGER INVERSION -36.3%
Kill Event Severity P() E[Loss]
Guthrie integration failure (culture clash, management bandwidth) -50% 25% -12.5%
Margin compression from competition/cost overruns -20% 35% -7.0%
Contract concentration/project delays -25% 30% -7.5%
Singapore construction downturn -35% 15% -5.3%
Key man risk (CEO Xu Ruibing departure) -40% 10% -4.0%

Tail Risk: Worst case: Guthrie integration fails simultaneously with a Singapore construction downturn, forcing the company to absorb losses on fixed-price contracts while servicing acquisition debt. Combined with potential write-downs on property development investments, equity could be wiped out. Probability: <5%, but severity would be -70% to -90%.

8 KLARMAN LENS
Downside Case

Bear case: Guthrie integration consumes management attention, margins compress to 6-8%, FY2026 earnings disappoint at S$10-12M vs market expectations of S$17M+. Stock re-rates to 12x P/E = S$120-144M market cap = S$0.31-0.38/share (-50% to -60% downside).

Why Market Wrong

The market may be overly optimistic about the seamless integration of a S$46M acquisition by a company with only S$19M equity and 3 years of operating history. The forward P/E of 16x assumes Guthrie delivers immediate earnings accretion, which is not guaranteed. Construction stocks also tend to overshoot in boom times due to order book euphoria.

Why Market Right

The market may be correct that this is a transformational moment. S$732.8M order book provides genuine visibility. Singapore's construction pipeline is government-backed (T5, MRT expansion, public housing). The CEO has 30 years of experience despite the company being young. If Guthrie integration succeeds, this could be a S$500M+ market cap company by FY2027.

Catalysts

FY2025 full-year results (expected Aug 2026) showing first Guthrie revenue contribution. Major contract wins for Changi T5 or MBS expansion. Property development projects reaching TOP milestones. Potential institutional coverage initiation post-mainboard transfer.

9 VERDICT WAIT
B+ T3 Adaptable
Strong Buy$0.4
Buy$0.5
Sell$0.9

Ever Glory United Holdings is an exciting growth story in Singapore's booming construction sector with exceptional insider ownership (78%) and a massive S$732.8M order book. However, at P/E 33x, the stock prices in perfection for a commodity contracting business with a 3-year track record and significant acquisition integration risk. Wait for a pullback to S$0.50 or below for adequate margin of safety. Monitor Guthrie integration progress and FY2026 margins.

🧠 ULTRATHINK Deep Philosophical Analysis

ZKX - Ultrathink Analysis

The Real Question

The real question here is not whether Ever Glory United can grow -- it clearly can. Revenue has gone from S$19M to S$75M in three years, and the S$732.8M order book all but guarantees the top line will keep expanding. The real question is: does growth create value in M&E contracting, or merely create activity?

Construction subcontracting is one of the oldest businesses in the world, and one of the least rewarding for shareholders over long time horizons. You build someone else's building, using someone else's design, competing against dozens of firms who can do the same thing. You win contracts primarily on price. Your margins are set at the tender stage, and every cost overrun between then and project completion comes out of your pocket. The fact that Ever Glory has grown fast does not, by itself, tell us anything about whether it will generate attractive returns on capital at scale.

Hidden Assumptions

The market is making several assumptions that deserve scrutiny:

Assumption 1: Guthrie integration will be smooth. The market prices this as a fait accompli. But Guthrie Engineering was divested by its parent company -- companies rarely sell crown jewels. Why was Guthrie for sale at S$46M when its order book alone was S$312M? Was it unprofitable? Were there project losses? Did key talent leave? We do not know. A S$46M acquisition by a company with S$19M of equity is not a bolt-on -- it is a bet-the-company transaction.

Assumption 2: The S$732.8M order book converts to revenue at historical margins. Order books in construction are notoriously unreliable indicators of profitability. They tell you how busy you will be, not how profitable you will be. A contractor can have a billion-dollar order book and still lose money if projects are mispriced, materials costs spike, or labor shortages force overtime.

Assumption 3: Singapore's construction boom is sustainable. BCA forecasts S$47-53B for 2025 and S$39-46B/year through 2029. But this includes mega-projects (T5, MBS) that are one-time in nature. And government demand can be pulled forward, creating future troughs. Singapore has had construction downturns before.

Assumption 4: Insider ownership = alignment. At 78%, the founders control the company absolutely. But concentrated ownership is a double-edged sword. Related party transactions are already significant -- S$2.8M in sales to related parties in FY2024. Property development ventures (25% of Primest Land, 5% of Bayswood) flow capital to entities where the founders may have interests. High insider ownership can also mean minority shareholders have no voice.

The Contrarian View

For the bears to be right, one or more of the following would have to be true:

  1. Guthrie was a lemon. Bought for S$46M, it was divested for a reason. If Guthrie has hidden project losses, onerous contracts, or talent flight, the acquisition could become a millstone. The provision for contingent liabilities (S$555K) in the FY2024 accounts, while related to Fire-Guard not Guthrie, hints that acquisition accounting can harbor surprises.

  2. Margins mean-revert to commodity levels. FY2024's 14.9% gross margin may itself be above normal. The M&E contracting industry in Singapore typically operates at 8-12% gross margins. As Ever Glory takes on larger, more complex projects through Guthrie, it may find that execution risk rises faster than scale benefits.

  3. The share count balloons. Since the IPO at 79.8M shares, the count has grown to 381.5M through three bonus issues, acquisition shares, PSP shares, and placements. Another bonus issue was announced in March 2025. The convertible bonds add further dilution risk. By the time Guthrie earnings materialize, there may be 450M+ shares outstanding.

Simplest Thesis

Ever Glory United is a Singapore M&E contractor priced as a growth compounder -- the order book justifies the growth, but the commodity nature of contracting does not justify the premium.

Why This Opportunity Exists

The stock has risen from S$0.085 at IPO to S$0.745 -- a 776% gain in under 3 years. This is the classic small-cap Singapore construction stock trajectory: IPO cheaply, grow fast, announce transformative acquisition, get mainboard transfer, attract retail enthusiasm. The narrative is compelling: young Chinese-Singaporean founder, 30 years of industry experience, government-backed construction boom, mega-projects on the horizon.

But the mispricing, if it exists, is to the upside. The market is paying 33x trailing earnings for a company that has existed for 3 years, operates in a commodity industry, and just made a bet-the-company acquisition. The "opportunity" for a value investor is to wait patiently for the inevitable disappointment -- a quarter where margins disappoint, or an integration hiccup -- and buy at a price that discounts these risks rather than ignoring them.

The question is not whether Ever Glory is a good company. It may well be. The question is whether it is a good investment at 33x earnings. The answer, for now, is no.

What Would Change My Mind

  1. Two consecutive quarters of post-Guthrie results showing >12% gross margin and >8% net margin. This would demonstrate that the integration is working and that scale is not compressing margins.

  2. Stock pullback to S$0.50 or below. At 10-12x forward earnings, the risk/reward becomes attractive even for a commodity business.

  3. Insider buying at current or higher prices. If CEO Xu Ruibing is buying shares on the open market at S$0.70+, it would signal genuine conviction beyond the promotional narrative.

  4. Successful completion of Changi T5 or MBS M&E contract. Winning and executing a mega-project would validate the Guthrie acquisition thesis and establish Ever Glory as a top-tier M&E contractor.

The Soul of This Business

At its core, Ever Glory United is the story of two Chinese immigrants to Singapore who bootstrapped a construction subcontracting business from nothing in 2018 and turned it into a S$284M company in 7 years. That is genuinely impressive, and the hunger and ambition are real.

But the soul of M&E contracting is execution, not innovation. You do not build a moat by installing air conditioning better than anyone else. You build a business by being reliable, cheap enough to win contracts, and disciplined enough to complete them profitably. The winners in this industry are not the fastest growers -- they are the survivors. The firms that avoid the project from hell, that do not overbid, that do not grow faster than their management bandwidth allows.

Ever Glory's aggressive acquisition strategy (Fire-Guard in Year 1 of listing, Guthrie in Year 2) is either visionary or reckless. There is no way to know yet. The S$732.8M order book is both the evidence of success and the source of risk -- every one of those contracts is a promise that must be fulfilled profitably. If even 10% turn into problem projects, the earnings impact would be devastating.

The patient investor's path here is clear: admire from a distance, keep the company on the watchlist, and wait for the price to reflect the risks rather than just the opportunities. Singapore's construction boom has years to run. There is no urgency to buy at 33x.

Executive Summary

3-Sentence Thesis: Ever Glory United Holdings is a fast-growing Singapore M&E (mechanical and electrical) engineering contractor that has transformed from a small subcontractor into a significant player through organic growth and the transformative S$46M acquisition of Guthrie Engineering. With an order book of S$732.8M (roughly 10x FY2024 revenue), strong insider ownership (78%), and Singapore's construction boom driven by Changi Airport Terminal 5 and Marina Bay Sands expansion, the company has clear revenue visibility through 2027+. However, at P/E 33-37x, the stock prices in significant growth expectations, and integration risk from the Guthrie acquisition combined with the company's short track record (founded 2018, listed 2023) warrants a cautious entry price.

Key Metrics Dashboard:

Metric FY2022 FY2023 FY2024 TTM (Jun '25)
Revenue (S$M) 27.98 47.48 74.67 71.12
Net Income (S$M) 1.77 6.83 8.96 7.89
Gross Margin 10.3% 23.1% 14.9% 13.8%
Operating Margin 7.2% 19.9% 10.3% 8.1%
ROE 59.7% 60.6% 47.1% ~36%
EPS (cents) 1.0 2.69 3.47 2.07
FCF (S$M) (0.80) 5.87 9.24 4.52

Verdict: WAIT - Accumulate below SGD 0.50, Strong Buy below SGD 0.40

Phase 0: Business Understanding

What Does the Company Do?

Ever Glory United Holdings is a Singapore-based M&E engineering contractor. "M&E" in construction means all the mechanical and electrical systems inside buildings -- the air conditioning (ACMV), electrical wiring, fire protection, plumbing, and integrated building services. The company is a subcontractor that works on both public (HDB flats, government buildings) and private (condos, hotels, commercial buildings) sector projects.

Business Segments:

  1. M&E Engineering Services (core, ~100% of revenue): Supply and installation of ACMV systems, electrical engineering, fire protection, plumbing/sanitary/gas, and integrated building services. Operates through subsidiary Sunbeam M&E Pte. Ltd. (founded 2018) and Fire-Guard Engineering Pte. Ltd. (acquired Feb 2024 for S$4.3M).
  2. Property Investment & Development (nascent): Through Ever Capital Pte. Ltd., the Group has invested in a 20-unit freehold residential project in Geylang (25% stake, TOP end-2028) and a food factory at Mandai Estate (5% stake via Newave Solutions, TOP end-2027). This segment contributed zero revenue in FY2024.

Revenue Mix (FY2024):

  • Private sector: ~87%
  • Public sector: ~13%

How Does the Company Make Money?

The company wins construction contracts through tendering (both as nominated and domestic subcontractor), then provides M&E engineering services on a fixed-price basis. Revenue is recognized over time using the percentage-of-completion method (input method). The company earns a spread between contract price and its costs (labor, materials, subcontractor fees).

Key Economic Dynamics:

  • Project-based: Revenue is lumpy and depends on contract wins and project timing
  • BCA Grading: The L6 grade for electrical engineering and IBS allows tendering for unlimited-value public sector projects -- a significant competitive advantage among smaller M&E contractors
  • Working Capital Heavy: Trade receivables + contract assets grew to S$30M in FY2024 (up from S$11.4M in FY2023). Average trade receivables turnover: 32 days. Trade payables turnover: 40 days.

Corporate History Timeline

Year Event
2018 Sunbeam M&E Pte. Ltd. incorporated by Xu Ruibing and Sun Renwang
2019 First major contract: PSA Tuas Terminal (>S$20M)
2021 Holding company Ever Glory United Holdings incorporated
2022 Revenue S$28M, obtained ME15 (IBS) Grade L5, ISO certifications
May 2023 Listed on SGX Catalist at S$0.22/share
2023 Revenue S$47.5M, multiple bonus share issues
Feb 2024 Acquired Fire-Guard Engineering for S$4.3M (30+ year track record)
Dec 2024 Obtained L6 grading for electrical and IBS, L5 for plumbing
Mar 2025 Issued S$5M convertible bonds
Jul 2025 Acquired Guthrie Engineering (S) Pte Ltd for S$46M
Dec 2025 Transferred to SGX Mainboard; public offer at S$0.64/share
2025 Secured S$508M in new contracts; order book S$732.8M

Phase 1: Risk Analysis (Inversion)

"Tell me where I'm going to die, so I'll never go there." - Charlie Munger

Risk Register

# Risk Event P(Event) Impact Expected Loss Monitoring Trigger
1 Guthrie integration failure 25% -50% -12.5% Margins below 8% for 2 consecutive quarters
2 Contract concentration/project delays 30% -25% -7.5% Revenue miss >15% vs order book conversion
3 Singapore construction downturn 15% -35% -5.3% BCA demand forecast below S$35B
4 Key man risk (CEO Xu Ruibing) 10% -40% -4.0% CEO departure or health event
5 Margin compression from competition 35% -20% -7.0% Gross margin below 12% sustainably
6 Working capital squeeze 20% -25% -5.0% Days sales outstanding >60 days
7 Property development losses 15% -15% -2.3% Write-downs on property investments
8 Dilution from convertible bonds/bonus shares 40% -10% -4.0% Outstanding shares >450M
9 Related party transactions abuse 10% -30% -3.0% RPTs exceeding 5% of revenue
10 Regulatory/compliance issues 10% -20% -2.0% BCA downgrade or covenant breach escalation

Total Expected Downside: -52.6% (non-additive; realistic combined scenario: -25% to -35%)

Detailed Risk Analysis

1. Guthrie Integration Risk (CRITICAL) This is the single most important risk factor. Guthrie Engineering was acquired for S$46M -- roughly 2.4x EGU's FY2024 equity of S$19M. Guthrie's order book of S$312M as of Dec 2024 represents 4.2x EGU's FY2024 revenue. The company is essentially doubling in size overnight. Integration challenges include:

  • Culture clash between a young, founder-led firm and an established legacy company
  • Guthrie had notable projects (Marina Bay Sands, Jewel Changi) but was being divested by its parent
  • Management bandwidth stretched thin
  • S$17M share placement to partially fund the acquisition = dilution

2. Short Operating History Sunbeam was only founded in 2018. The company has never operated through a full construction cycle downturn. Management's track record, while impressive in growth, is untested in adversity.

3. Gross Margin Volatility Gross margins swung from 10.3% (FY2022) to 23.1% (FY2023) to 14.9% (FY2024). This is characteristic of project-based businesses where individual project margins can vary enormously. The FY2023 margin was anomalously high due to "higher profit margin projects." This volatility makes earnings hard to predict.

4. Covenant Breach (FY2024) The company disclosed a banking covenant breach in FY2024 -- they failed to obtain bank consent before declaring dividends and failed to maintain required utilisation rates. While classified as technical breaches, this suggests governance may lag behind the pace of growth.

Phase 2: Financial Analysis

Income Statement Trends

Metric FY2021 FY2022 FY2023 FY2024
Revenue (S$'000) 18,772 27,980 47,478 74,672
Growth % - 49.1% 69.7% 57.3%
Gross Profit (S$'000) - 2,890 10,954 11,161
Gross Margin - 10.3% 23.1% 14.9%
Operating Income (S$'000) - 2,010 9,430 7,700
Net Income (S$'000) 605 1,767 6,831 8,955
Net Margin 3.2% 6.3% 14.4% 12.0%
EPS (cents, adj for bonus) - ~1.0 2.69 3.47

Revenue CAGR (FY2021-FY2024): 58.5% -- extraordinary growth driven by Singapore's construction boom and the company winning increasingly larger contracts.

Normalized Earnings: The FY2024 net income of S$8.96M includes S$1.08M of bargain purchase gain (one-off) and S$1.01M share of JV profits. Stripping out the one-off bargain purchase, normalized net income is approximately S$7.9M.

Balance Sheet Analysis

Metric FY2022 FY2023 FY2024
Total Assets (S$M) 12.82 24.90 48.16
Total Equity (S$M) 2.96 11.28 19.00
Cash + Fixed Deposits (S$M) 0.50 6.66 12.51
Total Debt (S$M) 1.23 1.58 4.46
Net Debt (Cash) (S$M) 0.73 (5.08) (8.05)
D/E Ratio 0.42x 0.14x 0.23x
Current Ratio 1.31x 1.80x 1.52x
Remaining Performance Obligations - S$104M S$101M

Balance Sheet Assessment: Reasonably clean. Net cash position of S$8M as at FY2024. However, this picture changes dramatically post-Guthrie acquisition (S$46M in Jul 2025), funded by:

  • S$17M share placement
  • S$5M convertible bonds (Apr 2025)
  • Presumably additional debt/cash on hand

Post-Guthrie, the company's balance sheet will be materially different and likely leveraged.

Cash Flow Analysis

Metric FY2022 FY2023 FY2024
Operating Cash Flow (S$M) (0.76) 5.97 9.43
CapEx (S$M) (0.04) (0.10) (0.20)
Free Cash Flow (S$M) (0.80) 5.87 9.24
Dividends Paid (S$M) (1.00) (1.27) (3.03)
FCF Yield (at current mkt cap) - - 3.3%

FCF Conversion: Excellent in FY2023-24. OCF exceeded net income due to favorable working capital changes and strong billings.

DuPont ROE Decomposition (FY2024)

Component Value
Net Margin 12.0%
Asset Turnover 1.55x
Equity Multiplier 2.54x
ROE 47.1%

The high ROE is partly driven by financial leverage (equity multiplier of 2.54x) and high asset turnover. This is typical of asset-light contracting businesses. The net margin of 12% is respectable for M&E contracting.

Owner Earnings Calculation (FY2024)

Item S$'000
Net Income 8,955
Add: Depreciation & Amortization ~609
Less: Maintenance CapEx (200)
Less: One-off gains (bargain purchase) (1,075)
Owner Earnings ~8,289

At S$284M market cap, the Owner Earnings yield is approximately 2.9% -- modest.

Valuation

Current Valuation Metrics:

  • P/E (TTM): 32.9x
  • P/E (FY2024): 31.7x
  • Forward P/E: 16.4x (implies ~S$17.3M earnings expected in FY2026)
  • P/B: 14.9x (equity was only S$19M at FY2024 end)
  • EV/EBITDA: ~27x
  • FCF Yield: 3.3% (on FY2024 FCF)

DCF Valuation (Conservative):

Assumptions:

  • FY2025E Revenue: S$100M (TTM S$71M + partial Guthrie contribution from Jul 2025)
  • FY2026E Revenue: S$200M (full year Guthrie + organic growth from S$732M order book)
  • FY2027E Revenue: S$220M (steady state)
  • Normalized net margin: 8-10% (lower than FY2024's 12% as Guthrie margins may be lower)
  • Terminal growth: 3%
  • Discount rate: 12% (small cap, project-based, Singapore)
Year Revenue Net Income PV Factor PV
FY2026 200 18 0.893 16.1
FY2027 220 19.8 0.797 15.8
FY2028 230 20.7 0.712 14.7
FY2029 240 21.6 0.636 13.7
FY2030 250 22.5 0.567 12.8
Terminal - 23.2 - 146.0
Total S$219M

DCF fair value: S$219M / 381M shares = S$0.57/share

Earnings-based Valuation:

  • If FY2026 earnings reach S$18M (10% margin on S$180-200M revenue)
  • At 15x P/E (reasonable for small-cap contractor): S$270M = S$0.71/share
  • At 12x P/E (conservative): S$216M = S$0.57/share
  • At 18x P/E (growth premium): S$324M = S$0.85/share

Fair Value Range: S$0.50 - S$0.70/share

At S$0.745, the stock is trading at the upper end to slightly above fair value range.

Phase 3: Moat Analysis

Moat Assessment: NARROW (Weakening)

Moat Sources:

  1. BCA Grading (L6 for Electrical & IBS): This is the most tangible competitive advantage. L6 grading allows tendering for unlimited-value public sector projects. Only a limited number of M&E contractors have L6 grading. However, this is more of a license than a moat -- other firms can achieve this through sustained performance.

  2. Track Record & Relationships: CEO Xu Ruibing has ~30 years of M&E experience, and the management team has deep relationships with developers, main contractors, and consultants. The company notes that "SBME, as an existing M&E contractor, generally has better execution capacity than new entrants" and benefits from "established partnerships with certain suppliers and subcontractors."

  3. Scale (Post-Guthrie): With S$732.8M order book and the combined capabilities of Sunbeam, Fire-Guard, and Guthrie, the company can now pursue larger, more complex projects (T5, MBS expansion, hospitals). However, many competitors also operate at this scale.

Moat Weaknesses:

  • M&E contracting is fundamentally a commodity business -- projects are won primarily on price
  • Low switching costs -- customers can easily change M&E subcontractors between projects
  • No pricing power -- fixed-price contracts mean the contractor absorbs cost overruns
  • Limited barriers to entry at the lower end (anyone with BCA registration can compete)
  • Gross margin volatility (10-23%) demonstrates lack of pricing power

Moat Width: NARROW Moat Durability: 5-10 years (BCA grading + track record create moderate barriers, but no structural competitive advantage) Moat Trend: Stable (Guthrie acquisition strengthens position but doesn't fundamentally change competitive dynamics)

Phase 4: Decision Synthesis

Management Assessment

CEO Xu Ruibing:

  • Co-founder, ~30 years M&E experience
  • Aggressive growth strategy -- acquired Fire-Guard (2024), Guthrie Engineering (2025)
  • Significant insider ownership: ~35% personal stake
  • Background: Previously executive director at Kin Xin Engineering / Libra Group

Chairman Sun Renwang:

  • Co-founder, ~30 years construction experience
  • Also ~35% ownership stake
  • Non-executive role; founded multiple construction and property companies

Skin in the Game: Outstanding. With ~78% insider ownership (combined founders + management), interests are extremely well-aligned with minority shareholders.

Concerns:

  • Very aggressive acquisition pace for a company only 3 years old
  • Covenant breach suggests governance/process gaps
  • No female directors (target by FY2027)
  • Key management compensation increased significantly (S$2.49M in FY2024 vs S$1.65M in FY2023)

Capital Allocation

Action Assessment
Organic Growth Excellent -- grew from S$19M to S$75M revenue in 3 years
Fire-Guard Acquisition (S$4.3M) Good -- 30-year track record, S$1.08M bargain purchase gain
Guthrie Acquisition (S$46M) High risk -- 4.2x revenue, transformative but unproven
Dividends Modest -- S$3M in FY2024, yield <0.5%
Share Buybacks Small (S$0.43M in FY2024) -- token gesture
Bonus Shares Frequent -- 3 bonus issues since IPO, dilutive but cosmetic
Convertible Bonds (S$5M) Potentially dilutive -- adds complexity

Investment Decision

Positives:

  1. Singapore construction boom (S$47-53B demand in 2025, sustained S$39-46B/year through 2029)
  2. Massive order book (S$732.8M) provides revenue visibility through 2027+
  3. Transformative Guthrie acquisition opens doors to mega-projects (T5, MBS)
  4. Exceptional insider ownership (78%)
  5. L6 BCA grading for key workheads
  6. Mainboard transfer provides institutional investor access
  7. Strong FCF generation (S$9.2M in FY2024)

Negatives:

  1. Very short track record (founded 2018, listed 2023)
  2. Never been through a construction downturn
  3. Gross margins highly volatile (10-23%)
  4. Guthrie integration risk is material
  5. Current P/E of 33x is expensive for a contractor
  6. M&E contracting has no structural moat
  7. Significant dilution from bonus issues, placements, and convertible bonds
  8. Covenant breach suggests growing pains
  9. Property development segment adds risk without proven returns
  10. Post-Guthrie balance sheet unknown but likely leveraged

Position Sizing

Given the risk profile (narrow moat, short history, integration risk), this warrants a small position size (1-2% of portfolio) with strict entry discipline.

Entry Prices

Level Price Basis P/E (FY2026E)
Strong Buy S$0.40 30% below DCF mid-point ~8.5x
Accumulate S$0.50 DCF lower bound ~10.6x
Fair Value S$0.60 DCF mid-point ~12.7x
Sell S$0.90 50% above fair value ~19.1x

Current Price (S$0.745) vs Accumulate (S$0.50): 49% above entry

Monitoring Metrics

Metric Threshold Action
Quarterly revenue Below S$35M Review thesis
Gross margin Below 10% for 2 quarters Review thesis
Order book Below S$500M Reduce position
Net debt/EBITDA Above 2.0x Reduce position
CEO ownership Below 25% Exit
BCA grading Downgrade from L6 Exit

Conclusion

Ever Glory United Holdings is an exciting growth story in Singapore's booming construction sector. The founder-led team has built the business from scratch in 2018 to a S$284M market cap company with a S$732.8M order book. The Guthrie acquisition is potentially transformative, opening access to mega-projects like Changi Airport Terminal 5.

However, the stock is priced for perfection at 33x trailing earnings. The company has no structural moat (M&E contracting is a commodity business), a very short track record, and faces significant integration risk from a transformative acquisition. The high ROE is partly a function of leverage and the asset-light nature of contracting, not competitive advantage.

Recommendation: WAIT. The business is worth watching closely. If the Guthrie integration goes well and FY2026 delivers S$15-20M in earnings, the stock could justify S$0.60-0.85. But at the current price, the risk/reward is insufficient for a value investor. Wait for a pullback to S$0.50 or below.

Sources: Ever Glory United Holdings Annual Reports 2023 & 2024, IPO Prospectus (2023), SGX announcements, StockAnalysis.com, MarketScreener, TipRanks, Minichart.com.sg, The Edge Singapore