KSH Holdings' net profit slips by 11.2% to S$20.4m

The Group's revenue reflected the Construction business sector's revenue decrease, plunging by 35.1%.

In a news release, KSH Holdings Limited, a well-established construction, property development and property management group, announced a net profit of S$20.4 million on revenue of S$170.6 million, for the full year ended March 31, 2012.

Commented Mr Choo Chee Onn, Executive Chairman and Managing Director of KSH Holdings, “The Group remained profitable in FY2012 notwithstanding a challenging period. We continued to rebalance our portfolio, with good results seen in our Property Development and Management segment. Through strategic consortiums and joint ventures, the Group is redeveloping properties such as Hong Leong Garden Shopping Centre, Seletar Garden and 11 King Albert Park. As for our construction segment, going forward, we will continue to have a balanced portfolio that comprises public and private sector projects and work towards improving productivity with cost-effective measures.

“To reward our loyal shareholders, apart from the interim dividend, the Board of Directors is declaring a one-tier tax exempt final dividend of 0.5 cent per share, bringing total dividends declared to 1.5 cents per share.”

The Board of Directors has also proposed a bonus issue to their shareholders on the basis of 1 bonus share credited as fully paid for every 10 existing shares in the Company. The proposed bonus issue, which would provide greater liquidity for the Group’s shareholders, will be issued pursuant to the share issue mandate approved by shareholders of the Company at the 5th Annual General Meeting of the Company held on 22 July 2011.

Further details of the Proposed Bonus Issue will be provided in a separate announcement to be released by the Company in due course.

Performance Review

Group Revenue decreased 35.1% from S$262.8 million for the full year ended March 31, 2011 to S$170.6 million in FY2012, largely due to a 43.5% decrease in revenue from the Construction business segment from S$257.3 million in FY2011 to S$145.4 million in FY2012.

The Construction business segment has accounted for 85.2% of the Group Revenue in FY2012 while the revenue from Group’s Property Development and Management segment of S$25.3 million has accounted for a significantly larger portion in the Group Revenue of 14.8% in FY2012 as compared to 2.1% in FY2011.

Geographically, the bulk of KSH’s revenue continued to be derived from its operations in Singapore. In FY2012, Singapore contributed S$165.2 million, making up 96.8% of total sales, while the People’s Republic of China contributed S$5.5 million, accounting for 3.2% of total revenue.

Cost of sales decreased by 36.7% from S$221 million in FY2011 to S$140 million in FY2012 mainly due to decrease in cost of construction business, offset by increase in cost recognised from sale of development property. Overall, operating expenses also decreased 17% from S$18 million in FY2011 to S$15 million in FY2012.

Given the above, net profit decreased 11.2% from S$23 million in FY2011 to S$20.4 million in FY2012. This was mitigated by a 65.8% increase in other income from S$6 million in FY2011 to S$9.9 million in FY2012 mainly due to increase in gain of fair value adjustments of investment properties and interest income.

The Group’s borrowings and debt securities decreased from S$94.5 million in FY2011 to S$75.5 million in FY2012 and gearing remains low at 0.12 times.

Earnings per share and net asset value per share stood at 5.30 cents and 39.71 cents respectively, as at March 31, 2012. EPS was computed based on the weighted average number of shares of 344,918,792 in FY2012.

Prospects and Growth Plans

The Ministry of Trade and Industry expects Singapore’s GDP to grow between 1% to 3% this year. Singapore’s economy grew by 1.6% on a year-on-year basis in the first quarter of 2012. On a quarter-on-quarter seasonally-adjusted annualised basis, the economy had expanded by 10%. However, authorities remain cautious about Singapore’s growth outlook arising from uncertainty in the Eurozone, fragility in recovery of United States economy and lacklustre growth of exports in Asia.

The construction sector grew by 7.7% on a year-on-year basis, an improvement from the 2.9% growth in the preceding quarter. On a sequential basis, the sector rebounded by an annualised rate of 32.1%, largely due to increase in construction activities in the residential and institutional building segments. However, tender prices are likely to remain competitive and a backdrop of an anticipated softening in private sector construction demand remains.

Mr Choo commented, “We are keeping watch on the market landscape and we are cautiously optimistic on the outlook of our construction business. Notwithstanding the inflationary pressures on global construction materials and rising labour costs, our strong existing order books of approximately S$467 million as at May 2012 will bolster the Group against the softening in the global economy.”