Monday, March 30, 2015

Low Keng Huat

Low Keng Huat: Low Keng Huat's (LKH) 4QFY15 net profit soared 816% to $61.4m, bringing full year earnings to $144.9m (+201%).

In the quarter, revenue skyrocketed to $779.9m from a small base of only $22m in 4QFY14, taking FY15 revenue to $1.23b (FY14: $79.7m).

Development revenue of $1.1b led the surge (FY14: nil), contributed by the sale of DBSS housing units at Parkland Residences and office units at Paya Lebar Square, which obtained TOP in Oct and Nov last year, respectively.

The construction business turned in sales of $85.2m (+187.8%), boosted by the $114.3m contract to design and build Genting Singapore's upcoming hotel at the Jurong lake district.

Operational costs ballooned, led by a surge in admin costs to $32.7m (+93%) from higher employee and directors' remuneration, and other operating expenses of $33m (FY14: $6m), arising from impairment losses for the Balestier Tower and Vung Tau towers in Vietnam.

Net gearing improved considerably to 0.1x from 0.63x a year earlier.

The Paya Lebar Square retail mall (45% owned) is now 99% leased and has contributed to bottom line beginning Dec. Meanwhile, the group announced in Feb the acquisition of a 20% stake in an entity, which will be acquiring AXA Tower for $1.17b, or $1,735 psf.

A first and final DPS of 3¢ and special 2¢ DPS has been declared, bringing the full year dividends to 5¢ (FY14: 3¢), giving a 25.5% payout ratio, shy of the historical 30-40% level Market Insight was expecting. This translates to a 6.7% yield.

Low Keng Huat is currently trading at 0.9x P/B and remains on Market Insight's Yield portfolio.

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