Koh Brothers – a construction, property development and specialist engineering solutions provider – recorded earnings of $2.0 million in 1HFY21 ended June, a reversal from the $17.7million in losses logged in the previous year.
On a fully diluted basis, earnings per share was 0.48 cents, compared to losses per share of 4.3 cents in 1HFY20.
With this, net asset per ordinary share was 69.53 cents on June 30, compared to 69.80 cents on Dec 31.
Revenue for the first six months of the year rose by 35% to $141.0 million, due to the gradual recovery of business activities in the construction and building materials division.
Cost of sales correspondingly increased by 15% to $132.8 million in 1HFY21, from $115.4 million in the year before.
In line with this, gross profit came in at $8.2 million, reversing from 1HFY20’s gross loss of $11.2 million which arose from operating expenses such as for manpower and machineries.
Other income edged down by 43% to $712,000 in 1HFY21, following a decrease in interest income. Conversely, other gains surged by 1,037% to $6.7 million, thanks to net fair value gains on investment properties.
In this time, distribution and marketing expenses dropped by 43% to $793,000, while administrative costs softened by 2% to $6.7 million following higher impairment on loans to joint ventures. Finance costs dropped by 23% to $4.6 million mainly due to lower bank borrowings and interest rates.
Koh Brothers’ share of profits of associated companies and joint ventures declined by 63% to $1.5 million following lower contributions from a property development project in South Korea that was completed in 2H2020.
As at June 30, cash and cash equivalents stood at $102.4 million, compared to $91.5 million in the year before.
The current’s ratio was 2.4x, while its net gearing ratio was 0.85x in end June.
Going forward Koh Brothers expects the construction sector to “remain challenging” on the back of a competitive environment, supply chain disruptions, manpower shortages and higher cost of construction materials.
Even so the group says it “will continue to tender for more construction projects where its requisite experience, capabilities and track record will help to maintain a strong order book”.
“Notwithstanding industry challenges, we remain confident of the prospects for this division, backed by our solid order book. We will tap on opportunities to secure more projects in both the private and public sectors, where we have the requisite track record and strong expertise,” says Francis Koh, managing director and group CEO.
He adds that the group will continue to optimise its resources and focus on raising productivity by embracing technology and digitalisation, to enhance margin efficiencies.
As for, the real estate development arm, Koh says he will be “cautious and selective in replenishing [the] land bank”.
Shares in Koh Brothers closed down 0.7 cents or 3.91% at 17 cents on Aug 5.
Cover image: file photo
