KSH profits up by 55% on lower cost of construction

Construction and property development group KSH Holdings Ltd. revealed a 55 percent growth in net profit to S$15.3 million for the nine months ended 31 December 2009, on revenue of S$207.4 million.

For 3QFY2010, it registered a turnaround in net profit after tax to S$5.2 million, from a loss of S$0.9 million in the same period last year. This was gained on the back of S$82.5 million in revenue for 3QFY2010.

For 9MFY2010, the group achieved an increase of S$6.2 million in margin contribution to its profit from operations amid a marginal decline in revenue.

This is owing to a lower cost of construction and an improvement in average gross margin in the company's core construction businesses to 13.6 percent from 8.2 percent in the same corresponding period.

For 3QFY2010, average gross margin went up to 10.6 percent from 5.9 percent in the same period in the previous year.

During the current period, the group's construction business in Singapore continued to be the strongest revenue contributor in both 9MFY2010 and 3QFY2010.

On top of several projects completed during the period, 3QFY2010 revenue amounted to S$82.5 million with contribution coming from a new project and other ongoing projects that are progressing into more advanced stages of construction.

The construction business saw an increase of S$3.6 million in margin contribution to the company's profit from operations in 3QFY2010, in light of an improved average gross margin.

KSH Holdings Executive Chairman and Managing Director Mr Choo Chee Onn said, "As the economy picks up, we have sought to strike a balance between prudent cost control measures and exploring new and viable projects. The business continues to be robust, backed by strong existing order books of approximately S$390 million,"

"Singapore's construction sector experienced strong double-digit growth for the third consecutive year, achieving a record level of on-site construction output of about S$30 billion in 2009, driven by strong construction demand in the preceding two years. We have noted too that the public sector is likely to make up 65 percent of total construction demand this year, mostly from projects such as transport and civil engineering sectors," he added.

The property development and management segment meanwhile registered a marginal S$0.3 million decrease in rental income from investment properties and development property in 3QFY2010 compared with the corresponding period.

As of December 31, 2009, the group maintained a working capital position with approximately S$59.9 million cash and cash equivalents.

Singapore's construction demand for year 2010 is expected to reach between S$21 billion and S$27 billion, based on media reports from Building and Construction Authority.