December 16, 2008 Tuesday

Developer's profits up 245% despite gloom

By Francis Chan

Low Keng Huat's gross profits were lifted by the completion of construction projects such as Domain 21 last year. PHOTO: KHENG LONG CO

DEVELOPER Low Keng Huat has defied the gloom in corporate Singapore by reporting that its third-quarter net profit surged 245 per cent to $13 million.

Revenue for the three months ended Oct 31 nearly doubled to $52.2 million from $26.4 million last year, the company announced yesterday.

The nine-month numbers were equally impressive, with net profits up from $11.4 million last year to $23.4 million on the back of a 66 per cent jump in revenue to $148.1 million.

Low Keng Huat's robust bottom line was due to higher development profits from associated companies, lower construction losses that were offset by lower profits from its hotel and investment segments, and a higher taxation charge.

The group's construction segment, however, was its key driver, with revenue for the nine months hitting $60.6 million.

Gross profit for the same period rose by $9.1 million to $18.3 million, mainly due to ex gratia payments from partners for the Domain 21 condominium development, cost recovery for concrete due to the Indonesian sand ban, and the completion of construction projects like The Chuan, Novena Phase 3, Twin Regency and Domain 21 last year.

Two of its new projects - Meritus Mandarin Hotel and Hard Rock Hotel at Sentosa - have also started to contribute to the group's performance.

Earnings per share for the quarter rose from 0.51 cent to 1.75 cents, while net asset value per share was at 28 cents as at Oct 31, down from 54 cents as at Jan 31.

No dividend has been declared or recommended for the nine months ended Oct 31.

Managing director Low Keng Boon hinted in the group's financial statement that harder times are ahead. He said: 'There is no certainty on how long the recession is going to last.'

The firm secured a $295 million project last month to build a shopping mall with an integrated bus interchange at Serangoon Central. This took its total order book to about $900 million.

Mr Low was also quoted in the statement as saying that the group's remaining two hotels, in Perth and Ho Chi Minh City, are expected to continue to perform well despite the looming recession.

Low Keng Huat shares closed one cent, or 8 per cent, up at 13.5 cents yesterday.