Hiap Hoe

Hiap Hoe: Announced 4Q11 results which saw a weaker bottom-line, on back of rising costs from construction activities. Rev at $38.1m, +39.6% yoy and flat qoq, while net profit at $13m, -21.1% yoy and -18.8% qoq. Result brings FY11 rev to $136.4m, +28% yoy and net profit to $47.4m, +36.9% yoy. Gross margins fell significantly for FY11 at 34% vs 46.6% yoy.

Higher topline driven by progressive rev recognition from the sale of residential projects, Signature at Lewis, Skyline 360O and Waterscape at Cavenagh which amounted to $29.5m in 4Q11 vs $25.3m in 4Q10. Progressive rev recognition from construction of two JV dev, The Beverly, and the integrated hotel/commercial development on Balestier Road/Ah Hood Road, contributed $8.5m to 4Q11 rev vs $2.0 in 4Q10.

Going forward, grp remains cautiously optimistic on outlook. Note that property cooling measures that took effect in Dec11 has impacted sales of new private homes, which fell by 62.9% mom. For 2012, Grp expects to launch Skyline 360O and Treasure on Balmoral upon receipt of the TOP in 2H12. Amidst uncertainties and possible changes in government policies, will remain mindful of effect of current cooling measures, and be prudent in its review of both its ppty sales and land acquisition programmes.

Overall net gearing remains a tad high with net gearing at 95.2%, while at current price, grp trades at just 4.4x P/E.