KSH eyes S$124.6m profit gain over the next five years

Despite reduced exposure to local property market.

According to UOB Kay Hian, as at 28 May 13, KSH had interest in 13 local property development projects with stakes varying from 12% to 45%. Amid the booming property market for the past two years, KSH has enjoyed brisk sales with more than 80% sold for its launched projects.

Based on KSH’s existing projects (the eight launched projects) and current sales, UOB Kay Hian estimates KSH to recognise a profit of about S$124.6m (S$0.32/share) over the next five years

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Cautious outlook but reduced exposure. Given the recent property cooling measures, our property analysts have forecasted residential volumes to moderate 20-40% yoy and prices to correct 3-8% as investment demand slows. Prices of industrial properties are also expected to stabilise with warehouse space prices correcting by 5.9% in 2Q13 (after 14 quarters of growth).

Despite the cautious outlook for the local property sector, we remain upbeat on KSH as most of its property sales have already been locked in. The remaining five projects that have yet to be launched are of a smaller scale, reducing the group’s exposure to the local property market.

Assuming at least 80% sales for all its local projects, we estimate KSH to recognise a profit of S$175.6m (S$0.46/share) from its property development arm over the next five FYs (from FY14 to FY19).