KSH Holdings

OCBC on 15 Aug 2012

KSH Holdings (KSH) announced 1QFY13 revenue of S$55.2m – 35% higher YoY mostly due to stronger construction revenues and $6.0m of progress recognition from Cityscape. 1QFY13 PATMI was up 66% YoY to S$4.3m on the back of firmer performance from its construction segment, S$0.8m disposal gains from the strata sale of one level of Tianxing Riverfront Square (Tianjin, China), and share of profits from associates reversing to a S$1.3m gain from a S$0.8m loss in 1QFY12. We judge this set of results to be in line with expectations. Excluding the ~S$0.8m disposal gain, we estimate core PATMI of S$3.5m in 1QFY13, constituting 24% of our FY13 forecast. We understand that KSH is actively seeking order book replenishment, though a weaker outlook in the private construction segment and limited major catalysts ahead in CY12 could prove challenging. Maintain HOLD with a higher S$0.26 fair value estimate, versus S$0.25 previously, as we update our valuation model with a firmer valuation for Tianxing Riverfront Square.

Good kick-off to the year
KSH Holdings (KSH) announced 1QFY13 revenue of S$55.2m – 35% higher YoY mostly due to stronger construction revenues and $6.0m of progress recognition from Cityscape. 1QFY13 PATMI was up 66% YoY to S$4.3m on the back of firmer performance from its construction segment, S$0.8m disposal gains from the strata sale of one level of Tianxing Riverfront Square (Tianjin, China), and share of profits from associates reversing to a S$1.3m gain from a S$0.8m loss in 1QFY12. We judge this set of results to be in line with expectations. Excluding the ~S$0.8m disposal gain, we estimate core PATMI of S$3.5m in 1QFY13, constituting 24% of our FY13 forecast. As at end-Jun 12, KSH’s order book stands at ~S$416m, which is relatively healthy even though somewhat lower versus the S$467m as at end-FY12. The lower order book also reflects the increasing challenging environment in the private construction segment.

Encouraging sales pick-up at residential projects
We saw an encouraging pick-up in the pace of sales at previously launched projects. Pre-sales figures of the Boutiq and Cityscape, which were 72% and 22% sold respectively as of end-Apr 12, each climbed to 5% by end-June 12. At the mostly sold Lincoln Suites (81% as at end-Jun 12), however, sales were more muted with only an additional 2% sold in 1QFY13. The group also recently launched the Palacio (formerly the Camay Court in Telok Kurau) and we expect MacPherson Green site to be launched later this year. However, management guided it is unlikely recent acquisitions at Hong Leong Garden Shopping Centre, Seletar Garden and 11 King Albert Park will be launched in 2HCY12.

Maintain HOLD
We understand that KSH is actively seeking order book replenishment, though a weaker outlook in the private construction segment and limited major catalysts ahead in CY12 could prove challenging. Maintain HOLD with a higher S$0.26 fair value estimate, versus S$0.25 previously, as we update our valuation model for new acquisitions with a firmer valuation for Tianxing Riverfront Square.