Low Keng Huat

Low Keng Huat: 1QFY13 earnings increased 16% y/y to $15.3m, mainly due to higher profits from the development segment, partially offset by lower profit from its construction, hotel and investment segments. Revenues deteriorated by 47% to $17.8m due to a decrease in construction activities. The construction segment saw revenues shrink 75.3% y/y to $4.4m due to the completion of Hard Rock Hotel at Sentosa and nex at Serangoon Central Mall last year. Its hotel & F&B segment also slumped 11.4% to $13.2m caused by lower occupancy rates. The growth came from its development segment, which was driven by lower marketing expenses attributed to its launch of Paya Lebar Square and Parkland Residences in the previous year. The retail mall at Paya Lebar square will be purchased by a new subsidiary for $300m, whereby its current 80% stake will be reduced to 55%, in view of generating a consistent income stream. The new subsidiary will be owned by Low Keng Huat (55%) and Sun Venture Realty (45%). At its last closing price of $0.63, LKH trades at a trailing P/E of 4.1x.