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BRC Asia Hits Record Net Profit In FY2025 · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Welcome back to the Deep Dive. Today, we are focusing on BRC Asia Limited,
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  a company that's, well, literally building the foundations of some of the biggest
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  projects across Asia, especially here in Singapore.
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  And we've got a really significant result to analyze.
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  For their full year ended September 30th, 2025, BRC Asia clocked a record net profit.
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  We're talking SIS, $94.1 million.
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  Record profit. On the surface, that sounds straightforward, right? A clear win.
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  It is. But when you start to peel back the layers, how they got there is a lot
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  more interesting than the what. Absolutely.
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  Because our mission today is to dissect exactly that. We're looking at the financial
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  moves that made this happen because some of the trends were,
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  well, they were pulling in opposite directions.
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  Revenue went up, yes, but a massive source of income they had last year just vanished.
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  It's a story of operational efficiency, really. Okay, let's unpack this.
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  We should probably start with the top line, with the scale of the business. Right.
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  So looking at overall revenue, it claimed about 5% year-on-year for FY 2025.
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  It reached $4.5553 billion. Solid growth.
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  But it wasn't steady all year, was it? The sources suggest things really picked
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  up in the back half of the year. Yeah, they did. That's where you see the real momentum.
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  In the second half alone, revenue jumped 16 percent, a big acceleration.
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  So what was driving that? Was it just higher prices? No, and that's the key.
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  The engine here wasn't price at all. It was sheer delivery volume.
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  BRC just moved a lot more steel. Higher tonnage, driven by a ton of activity,
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  both in Singapore and in their overseas markets.
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  So they're shipping more product than ever. But you just said it wasn't price.
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  In fact, a key headwind was falling steel prices, right? Exactly.
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  Global steel prices were down during the period, so that was tempering the growth
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  in dollar terms. And that's where it gets really strategic.
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  I mean, how do you keep your profits healthy when the price you get for each
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  unit is actually dropping? You have to be incredibly efficient in your execution. And they were.
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  Despite those lower selling prices, their gross profit still grew by 4% for
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  the year. And the most crucial number for a business like this,
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  the gross profit margin, it stayed stable, rock solid at 10.3%.
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  So that stable margin proves it.
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  They were extracting profit from every single extra ton they delivered,
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  even at a lower price point.
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  It confirms their operational machine, the cutting, the bending,
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  the logistics. It was just top notch.
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  Okay, so that's the foundation. Volume, dominance, and operational stability.
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  But as we said, the overall net profit only went up by about 1%. That seems small.
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  It does. But that 1% figure hides some massive shifts happening underneath.
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  We have to start with the elephant in the room, the huge drop in other income.
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  Right. It took a 60% hit, I believe. A 60% hit.
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  It fell from S$22.5 million last year all the way down to just $9.1 million.
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  That is a staggering drop. What happened there? It's almost entirely down to
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  one single event from the prior year. In FY 2024, they had this big one-off
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  gain of $16.5 million from selling an associate company.
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  Pristine Islands Investment. I remember that. That's the one.
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  So that cash injection, that wasn't repeatable.
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  To put it simply, BRC basically started FY 2025 with a $16.5 million hole they
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  had to fill just to match last year.
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  Wow. So the core business didn't just have to grow.
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  It had to find $16.5 million in new profit or savings just to tread water.
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  The fact they hit a record profit after that is, well, it says a lot.
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  It really does. It speaks to their internal discipline.
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  So where did they find the biggest savings?
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  The single biggest win was in finance. Their finance costs dropped by 34%,
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  a huge reduction down to $7.4 million.
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  A third of your financing costs just gone. That's massive in a capital-intensive
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  business. How did they pull that off? Two main drivers.
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  The report mentions generally lower interest rates, which of course helped.
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  But the more strategic piece is their improved operating cash flow.
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  Meaning the business itself was just generating cash faster. Exactly.
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  When your volume execution is that strong, you get paid faster,
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  you need less external borrowing.
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  And look, they actually reduced their total loans and borrowings by almost missed $24 million this year.
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  So this isn't just them getting lucky with market rates. They are structurally
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  de-risking the business.
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  Right. They're less exposed to short-term rate hikes than they were a year ago.
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  That's a sustainable change. Okay, so that's a huge piece of the puzzle.
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  What was the other major efficiency game?
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  That would be currency management. For a Pan-Asia company importing huge amounts
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  of raw materials, this is vital.
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  Their other operating expenses dropped 45%. And that was mainly from...
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  Lower foreign exchange losses? Precisely. They went from losing over $5 million
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  on FX last year down to just $1.6 million this year.
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  And on top of that, their hedging strategy worked.
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  They actually booked a S$2.8 million gain from foreign exchange contracts.
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  So it's not just luck, it's a better treasury management. It has to be.
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  That's another big chunk of that S$16.5 million shortfall they had to make up.
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  So strong execution on the top line, which funded a big reduction in borrowing
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  costs, combined with much better risk management on imports.
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  That's the bulk of it. You do see some expenses rising, of course.
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  Distribution and admin costs are up a bit. Which makes sense.
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  That's from integrating their new acquisitions, Southern Steel Mesh in Malaysia, right?
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  And getting Thailand fully operational. Exactly. You have to spend money to grow.
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  And there were a couple of other smaller positive signs.
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  The credit quality of their customers seems to be improving. It does.
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  They were able to reverse about $7.7 million in allowances for expected credit losses.
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  That's basically management saying they're more confident their customers will pay on time.
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  And the China joint venture also did well. Yep. A 23% increase in its contribution,
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  also thanks to delivering higher tonnage.
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  So all the little pieces are pulling in the right direction.
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  OK, let's move to the foundation of all this.
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  How strong is the balance sheet that's supporting this performance?
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  I'd say it's very solid. Net assets attributable to owners just crossed the
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  half billion dollar mark.
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  Net asset value per share is S1 dollars and 88 cents.
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  Their cash pile is robust at over 200 million. And as we said,
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  they're actively paying down debt. Right.
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  S23.9 million dollars less in loans and borrowings. It all fits that story of
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  strengthening the core.
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  And that strategic acquisition in Malaysia, SSM, that shows up here, too.
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  It does. You see property, plant and equipment increased by S16.3 million dollars.
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  That's them integrating the new assets. It's their big play to diversify and
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  tap into regional markets.
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  I did see one line item on the liability side that jumped out.
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  Contract liabilities increased by over $20 million.
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  Now, a liability sounds bad, but in this context.
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  It's the opposite. It's actually a fantastic sign of strength.
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  For BRC, this is almost all advance payments from customers for raw materials.
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  So clients are paying them up front to lock in future orders.
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  That's it. It shows incredible forward sales commitment and confidence from their major customers.
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  It's a powerful signal of market dominance.
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  Speaking of confidence, let's wrap the financials with shareholder returns.
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  How did they reward investors for this record profit? The commitment was clear.
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  They announced a total dividend of $0.20 per share for the year.
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  That includes a final dividend of $0.07 and a special dividend of another $0.07.
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  That's a pretty healthy payout. It is. It's a 58.2% payout ratio.
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  Gives you a dividend yield of about 4.9%. Management is signaling they believe
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  this level of performance is sustainable.
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  Okay, so that brings us to the future. We've established how they hit this record
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  profit through volume and efficiency.
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  So what does the road ahead look like?
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  Well, they are positioned perfectly to ride what looks like a massive construction
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  upcycle here in Singapore.
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  The company calls it integral to the nation's economic and urban progress.
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  The activity levels are just exceptional.
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  Give us the scale of it. What are the forecasts? For 2025, construction demand
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  is forecasted to be somewhere between the S-47 billion dollars and 53 billion dollars.
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  And the public sector is really driving the bus on this one.
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  We're talking about those huge multi-year projects. Exactly.
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  The massive Changi Airport Terminal 5, the Marina Bay Sands expansion,
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  all the new MRT lines, and crucially, a huge public housing initiative.
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  Right. The HDB plans to launch, what is it, 55,000 flats over the next few years?
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  Between 2025 and 2027 alone.
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  I mean, just think about the amount of reinforcing steel that goes into building that many homes.
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  And this isn't just a short-term spike, is it? No, the Building and Construction
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  Authority is projecting annual demand to average between S-39 and S-46 billion
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  dollars a year all the way out to 2029.
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  This is a sustained pipeline. So the market demand is clearly there.
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  But how do we know BRC has secured its piece of that pie? What does their order
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  book look like? This might be the most impressive number in the whole report.
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  As of September 30th, their outstanding sales order book stood at S1.9 billion dollars. 1.9 billion.
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  It's massive, and it gives them earnings visibility for up to five years.
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  Getting those big contracts for projects like the Changi T5 substructure really bolsters that backlog.
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  It's like having your next five years of work already mapped out.
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  That's incredible security. But in business, when things look that good,
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  there's always a catch, isn't there?
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  What's the critical risk? The risk, and BRC points this out themselves,
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  is intensifying competition.
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  Of course. The market is so attractive that it's drawing in new players.
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  And the established companies are all expanding their own capacity to get a
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  bigger slice. So the construction pie is enormous.
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  But the number of hands reaching for it is growing. That's the perfect way to
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  put it. And when competition heats up, you get pressure on prices.
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  Pressure on margins. So is it realistic for them to hold on to that 10.3% gross
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  margin if the market gets more crowded?
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  That is the pivotal question for the next few years. They have the revenue pipeline secured.
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  Now they have to defend the profitability of that revenue.
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  Which is probably why that acquisition in Malaysia, SSM, is so important. It's a way to diversify.
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  I think so. It's a proactive move to expand the field of play.
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  So they aren't totally dependent on defending their margins just in Singapore.
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  That's a powerful final picture.
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  So to summarize this for you, BRCAJ hit a record net profit,
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  but they did it the hard way, not through some big windfall,
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  but through incredible volume and really, really tight cost control.
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  They had to fill that $16.5 million hole from the prior year,
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  and they did it, mainly by slashing finance costs and mastering their currency risk.
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  And now they are staring at a multi-year construction boom with a S1.9 billion
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  dollar order book already in hand. Right. It seems like a perfect setup. It is.
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  That perfect setup is attracting a lot of competition. So the critical question for you to watch is this.
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  Can BRC's execution, its operational excellence, and its strategic expansion
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  be enough to protect those stable 10% to 11% gross profit margins as new players flood the market?
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  That defensive battle for margin against a backdrop of almost unlimited demand
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  is what you need to be watching in the quarters ahead.