Hock Lian Seng: 1Q15 net profit soared more than 7x to $18.6m on a more than 5x jump in revenue to $103.9m, largely due to the sale recognition of industrial project, Ark@KB, which obtained TOP in Mar '15, and additional units sold at Ark@Gambas.
Civil engineering revenue was marginally lower at $16.6m (-4%) as the new projects were still at the early phase of construction, while investment properties (mainly rental income from workers dormitory) was relatively flat at $2.6m.
Gross margin expanded to 23.9% from 21.7%, mainly due to the recognition of the Ark@KB project.
Admin expenses was 65.6% higher at $2.0m, mainly due to the higher performance bonus accrued, higher staff cost and additional legal fee incurred in view of the completion of the industrial development projects.
The group’s civil engineering order book stands at ~$440m, stretching revenue visibility over the next three to four years.
Meanwhile, the construction of The Skywoods, a 50% JV residential project, is targeted to be completed by 2016. The sale of units is on-going, with 230 units sold out of the total 420 units as at end Mar ‘15.
Going forward, management will continue to tender for infrastructure projects competitively and explore other business opportunities in the property-related segment.
Net cash position stood at $173.3m, representing $0.34 per share.
At the current price, the group trades at 2.3x trailing P/E and 0.91x P/B.
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