Published June 13, 2009

Low Keng Huat posts Q1 net of $11.2m

First-quarter earnings more than double as revenue more than trebles to $84m

By JAMIE LEE

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LOW Keng Huat's financial first quarter net earnings more than doubled, thanks to its construction segment and higher development profit contributions from related companies.

Net profit for the three months to April 30 jumped 129 per cent to $11.2 million from $4.88 million a year ago.

This translates to earnings per share of 1.51 cents, against 0.66 cents for the year-ago Q1.

Revenue for the construction, property development and hotel group more than trebled to $84 million from $26.8 million a year ago.

This was mainly due to its construction business, which registered a more than six-fold jump in revenue to $71.6 million from $11.3 million a year ago.

'The increase was due to the higher percentage of completion for ongoing projects one-north Residences and South Bank and the commencement of new projects Hard Rock Hotel at Sentosa, Meritus Mandarin Hotel and Serangoon Central Mall,' the group said in its financial statement. But revenue from its hotel and F&B businesses dropped 20.1 per cent to $12.3 million from $15.4 million a year ago.

'The decrease in hotel revenue of $3.1 million was attributable to lower revenue from Duxton Hotel Perth, Duxton Hotel Saigon and Starworth group of companies,' the company said.

'The group's two hotels in Perth and Ho Chi Minh City are expected to perform satisfactorily despite uncertainties in the global economic environment,' it added.

As for its development segment, contributions from associated and joint-venture companies jumped 91 per cent to $8.2 million from $4.3 million.

The company also registered a $21,000 loss in concessionary income - which is derived from the gaming centre operations in Duxton Hotel Saigon that opened for business in November 2006 - compared with a $487,000 gain a year ago.

'Our licence for operating the gaming centre was suspended by the Vietnamese government in November 2008,' the company said.

'We have submitted our appeal to the authorities to reinstate the licence but its outcome remains unknown as of April 30, 2009. The hotel remains open and is running as per normal business operations.'

The group's total order book stands at about $900 million. As at end-April, it has $26.2 million in its cash hoard, 50.6 per cent higher than the $17.4 million it had a year ago.

No dividend was declared. Shares of Low Keng Huat ended down half a cent yesterday to 26.5 cents.