SINGAPORE (Nov 28): Keong Hong Holdings, the homegrown property construction, development and investment group, reported earnings of $70.2 million for the FY17 ended Sept.
This is a 86.4% improvement over FY16’s earnings, lifted by an exceptional gain of $49.8 million on fair value gains on investment upon ceasing equity accounting in joint ventures.
Excluding the one-off gain, Keong Hong registered an operating profit of $20.4 million in FY17, down from from $37.7 million in FY16. The decline was mainly due to loss from the share of results of joint ventures and associates and the absence of lump sum profits from property development.
FY17 revenue came in at $233.9 million, 5.7% lower than the revenue of $248.0 million a year ago. This was due to lower recognition of construction revenue from projects such as SkyPark Residences, J Gateway and Amore, which had largely been completed in FY16.
The decrease in topline was partially offset by contribution from the construction of Seaside Residences condominium, Raffles Hospital Extension, the two resorts in Maldives as well as variation orders received and final billings for projects that had already been completed, such as Twin Waterfalls, Alexandra Central and J Gateway.
Gross profit weakened by 8.8% to $35.4 million. Consequently, gross profit margin decreased to 15.1% from 15.6%.
Keong Hong says its construction order book stood at $344.0 million at the end of Sept, providing the group with a sustainable flow of activities through the end of financial year 2019. Cash and cash equivalents stood at $77.3 million.
In its outlook, Keong Hong says Singapore’s construction sector contracted 7.6% in 3Q17 against 3Q16. However, given the successful collective sales of 17 private residential estates year to date and the redevelopment of these projects, the supply of private homes should more than double over the next one to two years.
“We look forward to capitalising on this increased construction demand for private residential homes,” says Keong Hong.
Meanwhile, latest URA property statistics indicated that prices of residential properties rose by 1.2% in the 3Q17 which bodes well for Keong Hong’s properties Parc Life and Seaside Residences which are currently on sale.
See: Keong Hong wins $214 mil contract to build Seaside Residences
Elsewhere in the Maldives, the group’s other hotel development, Pullman Maldives Maamutaa Resort, is on track to open in 2019.
See: Maldives property could add to Keong Hong’s recurring income
Keong Hong is recommending a one tier tax-exempt final dividend of 1.75 cents per share. This would bring the full-year payout to 2.0 cents per share.
Shares in Keong Hong closed 1 cent lower at 56 cents on Tuesday.
