Published December 16, 2008

Low Keng Huat Q3 profit trebles

Nine-month earnings double; higher development profit from associate firms

By EMILYN YAP
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PROPERTY and hospitality group Low Keng Huat (Singapore) yesterday reported a net profit of $12.95 million for the third quarter ended Oct 31, 2008 - more than treble the $3.75 million for the previous corresponding quarter.

Group revenue in the nine months soared 66% from a year ago to $148.09m, driven largely by an increase in construction revenue.

This drove earnings per share for the quarter to 1.75 cents, up from 0.51 cents in the year-ago period. Higher earnings came on the back of a near doubling in revenue to $52.26 million from $26.45 million.

For the nine months ended Oct 31, Low Keng Huat's net profit surged 105 per cent from a year ago to $23.36 million.

The higher earnings were mainly due to higher development profit from associated companies. Contributions from projects such as the one-north Residences, Duchess Residences and Regency Suites had increased, while those from Domain 21 had dropped.

Low Keng Huat also benefited from lower construction losses, partly because it managed to recover some cost increases.

Net earnings in the nine months would have been higher if not for lower profits from the hotel and investment segments.

Net profit before tax and minority interests for the hotel business dropped as concessionary income from gaming centre operations fell. Overall hotel revenues were also lower as the weaker Australian dollar shaved revenues from Duxton Hotel Perth.

Investments also booked a lower net profit before tax and minority interest. This was due to the sale of some quoted equities which had to be marked to market.

Group revenue in the nine months soared 66 per cent from a year ago to $148.09 million, driven largely by an increase in construction revenue. There was a higher percentage of completion for ongoing projects and new projects - the Hardrock Hotel at Sentosa and Meritus Mandarin Hotel - had also started.

Low Keng Huat said that it is 'in a strong financial position'. Its net gearing as at Oct 31 was 15.4 per cent, lower than the 24.2 per cent at end-January.

The group also expects its two hotels in Perth and Ho Chi Minh City to perform well despite more challenging economic conditions in Western Australia and Vietnam.

Low Keng Huat won a $295 million project last month to construct a shopping mall cum bus interchange complex at Serangoon Central. Its order book as at November was $900 million.

The counter gained one cent to close at 13.5 cents yesterday.