Wednesday, 13 February 2013

KSH Holdings

OCBC on 8 Feb 2013

KSH reported 3Q FY13 PATMI of S$8.1m, which surged 179% YoY mostly due to contributions from its property development segment as the group recognized earnings from The Boutiq, Cityscape@Farrer Park and Rezi 26. 9M FY13 earnings now cumulate to S$22.3m, up 108.3% YoY and forming 73% of our FY13 forecast. The group has sold a significant portion of launched projects, and we expect progress billings from already sold projects to underpin earnings growth ahead. Maintain BUY with an increased fair value estimate of S$0.62, versus S$0.50 previously, as we lower the RNAV discount for its property segment from 50% to 40% to reflect a lower risk profile given a larger percentage of projects sold, and raise our PE multiple for its construction segment from 3.0x to 4.0x - a level closer in line with that of its peers.

Delivering strong growth - 3QFY13 PATMI up 179% YoY
KSH reported 3Q FY13 PATMI of S$8.1m, which surged 179% YoY mostly due to contributions from its property development segment as the group recognized earnings from The Boutiq, Cityscape@Farrer Park and Rezi 26. 9M FY13 earnings now cumulate to S$22.3m, up 108.3% YoY and forming 73% of our FY13 forecast. Topline for the quarter came in at S$48.9m, which also increased 68% YoY mostly due to an increase in contributions from the construction segment.

Development progress billings underpin growth profile
The group has sold a significant portion of launched projects, and we expect progress billings from already sold projects to underpin earnings growth ahead. Cityscape@Farrer Park, a major project in KSH’s portfolio, is about 67% sold to date, while Sky Green at Macpherson and Palacio are 96% and 71% sold, respectively. Looking ahead, we expect the group to launch Hong Leong Garden, Seletar Garden and King Albert Park. Though the residential market is currently in a state of flux after recent cooling measures, we note that these three projects contain significant commercial components which would likely perform well.

Outlook for the construction segment healthy
The group recently cinched a contract win for Q Bay Residences, which boosted its construction order book by ~45% to ~S$461m as at 31 Jan 2013. Given the recent white paper on population growth indicating an increased population of 6.5m – 6.9m by 2030, we expect construction demand to remain firm over the long term as Singapore continues to ramp up infrastructure and housing growth. 

Fair value estimate increased to S$0.62
Maintain BUY with an increased fair value estimate of S$0.62, versus S$0.50 previously, as we lower the RNAV discount for its property segment from 50% to 40% to reflect a lower risk profile given a larger percentage of projects sold, and raise our PE multiple for its construction segment from 3.0x to 4.0x - a level closer in line with that of its peers.

No comments:

Post a Comment