KSH reports Q3 net profit of $5.1m

Company cautiously optimistic about the outlook of its construction business

KSH Holdings made a net profit of $5.09 million for the three months to end-December 2009, reversing a loss of $965,000 a year earlier, as expenses fell more quickly than revenues.

For the first nine months of its current financial year, which started on April 1 last year, the construction and property group’s net profit rose 55 per cent to $15.1 million, due mainly to lower construction costs, compared to a year earlier.

KSH, which has construction businesses in Singapore and Malaysia, and property development and property management operations in China, said its operating margins improved for both the three-month and nine-month periods ended Dec 31, despite lower revenues, as construction costs fell.

The group’s finance costs also fell sharply, to $581,000 for the three months to end-December, from $3.76 million a year earlier, as all its outstanding convertible notes had been redeemed by June 2009, and no further interest had to be paid on the notes in the most recent quarter, KSH said.

Its construction business in Singapore, where it acts as contractors for both private and public sector construction projects, is the group’s main revenue contributor.

KSH said it was ‘cautiously optimistic’ about the outlook of its construction business. It had a construction order book of over $390 million in Singapore at the end of January, it said.

But it ‘remains cautious’ on the possible impact that economic conditions and uncertainty in labour and material costs may have on the group’s performance for the next 12 months, it added.

‘Barring unforeseen circumstances, the group should remain profitable for the current financial year,’ KSH said.

In 2009, the group secured $159.7 million worth of contracts from the National University of Singapore for various construction projects, including residential buildings for the school’s university town.

KSH’s share price fell 2 per cent to 25 cents yesterday, before the earnings announcement, which was made after trading ended.

For the three months to end-December, its revenue fell 4.9 per cent to $82.5 million, compared to a year earlier, due mainly to a fall in income from its construction business as four projects were completed.

The projects are a five-storey shopping complex, Tampines Central 1, two other industrial developments – Forte at New Industrial Road and Platinum 28 at Genting Lane – as well as a residential project, The Coast at Sentosa Cove.

The $44.9 million loss in revenue contribution from these projects in the third quarter of its financial year was partly offset by a $41 million increase in revenue from a new project and ongoing projects that are still under construction, KSH said.

Source: Business Times, 9 Feb 2010