KSH Holdings profit up 56% to S$4.3mln

Will tap S$27bln BCA projected construction demand by maintaining projects in public and private sectors.

KSH Holdings Limited (“KSH Holdings” or the “Group”), a well-established construction, property development and property management group, on Tuesday announced a 56% rise in net profit to S$4.3 million for the three months period ended June 30, 2010 (“1QFY2011”). Revenue rose by 21% to S$72.4 million from S$60.0 million in the three months period ended June 30, 2009 (“1QFY2010”), according to a KSH Holdings report.

Commented Mr Choo Chee Onn, Executive Chairman and Managing Director of KSH Holdings, “I am pleased to report an increase in revenue and net profit for the Group for this financial quarter. This serves as a testimony to the resilience of our business and the confidence that our business partners have in us. Our core construction business continues to display strong growth and in line with our business strategy, we will continue to build up a balanced portfolio of public and private sector projects.”

Performance review
KSH’s core Construction segment remains as the Group’s strongest revenue contributor in 1QFY2011, contributing 98% of total Group revenue at S$71.0 million. Revenue from the construction business increased by S$12.3 million or approximately 21% to S$71.0 million in 1QFY2011, as compared to S$58.7 million in 1QFY2010. The increase was mainly due to revenue contributed from new projects and other ongoing projects that have progressed into advanced stages of construction.

Revenue from the Group’s Property Development and Management segment made up the remaining 2% of total revenue in 1QFY2011 at S$1.4 million. Rental income from the Group’s investment properties and development property increased by approximately S$0.1 million in 1QFY2011 as compared to the previous corresponding period.

In line with the increase in revenue, the Group’s profit before tax increased by 44% or approximately S$1.5 million from S$3.6 million in 1QFY2010 to S$5.1 million in 1QFY2011. As a result, the Group’s net profit attributable to shareholders rose by a marked 54% from S$2.7 million in 1QFY2010 to S$4.2 million in 1QFY2011.

The Group’s borrowings decreased by S$7.3 million to S$95.7 million as at June 30, 2010. This is attributed to the decrease in use of bills payable to banks, the repayment of finance lease obligations and bank term loans. As at June 30, 2010, the Group maintained a healthy balance sheet and working capital position, with cash and cash equivalents and fixed deposits of S$90.0 million.

The Group’s EPS and net asset value stood at 1.44 and 38.34 Singapore cents respectively, as at June 30, 2010.

Prospects and growth plans
The Building and Construction Authority (“BCA”) reported that construction demand in Singapore from January to May 2010 was approximately S$8.17 billion, with 59% or S$4.84 billion from the private sector and the remaining 41% or S$3.33 billion from the public sector. BCA projects construction demand for the year to range between S$21 billion to S$27 billion for 2010, and expects a sustained level of demand to continue through to 2012.

Riding on this uptrend, KSH will tap on these opportunities and further enhance its portfolio to maintain a good mix of projects in the public and private sectors for sustained growth in the business. At the same time, the Group will continue to tender for new construction projects to value add to its established track record in the business.

Mr Choo commented, “Going forward, backed by construction order books of more than S$312.0 million as at June 30, 2010, we are cautiously optimistic on the outlook of our core construction business. We will remain focused on our strategy, which is to look out for viable opportunities to tender for construction projects, whilst exercising prudence and being mindful of the possible impacts of the uncertainties in economic conditions and rising costs that may have an effect on the performance of our business.”