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Stocks In Focus SG (Goodland, Keong Hong, Oxley Hldgs) – 29/11/13
Goodland’s FY13 Earnings Fell 30.9%
For the year ended 30 September 2013, revenue for Goodland slumped 33.3 percent from $56 million in FY12 to $37.3 million. This was as a result of weaker demand for residential units in Singapore due to the recent property cooling measures introduced and took effective on 29 June 2013.
Along with the slide in revenue, earnings for the year fell 30.9 percent to $17 million from $24.6 million in FY12, as the company faces higher financing costs and lesser contribution from the share of results of associate companies.
Despite weaker performance, Goodland has maintained and declared a dividend per share of $0.005.
Significance: Moving forward, Goodland expects property investment in Singapore to regain traction which is in tandem with high employment rate, strong market liquidity and low financing costs, while it diversifies its investments into the overseas market.
Keong Hong Posts Record Net Profit For FY13
Keong Hong Holdings achieved a record net profit of $21.6 million, up 8.1 percent, despite a decline in revenue of 12.4 percent to $146.6 million for the full-year ended 30 September 2013 and proposed a final dividend of $0.02 per share.
The lower revenue was mainly due to lower revenue recognition for ongoing projects as several projects had been substantially completed in FY12. However, the firm managed to report earnings growth as its gross profit margin also improved to 20.7 percent arising from cost savings in certain projects, reward of $0.4 million from project clients for achieving the agreed Construction Quality Assessment System (CONQUAS) score for two completed projects and variation orders.
The company has, in FY13, made further inroads in its property development business, expanded overseas ventures and invested in strategic alliances. Notably, its venture in Maldives for the development and operation of Kooddoo Domestic Airport, a hotel and resort will provide an alternate income stream.
Significance: Keong Hong’s current construction order book stood at $611 million with projects stretching to FY16 which will be keeping the firm busy. However, it cautioned on the challenging industry environment due to competition, rising costs, shortages of skilled labour and increasing foreign workers’ levy.
Oxley Enters JV To Develop Land In Malaysia
Oxley Holdings via its subsidiary, Oxley Ruby, has entered into a joint venture (JV) agreement with Peninsular Teamwork (PT). Under the agreement, Oxley Ruby will be granted rights to develop a freehold tenure land plot located in Malaysia’s state of Selangor which is owned by PT.
The land, with an aggregate area of 15.3 acres, is currently undeveloped and holds an agricultural status. Meanwhile, PT shall apply for approval from the relevant authority for the land to be developed into a residential project of 900 residential units.
In return, PT will be entitled to 30 percent of the gross development value of the project or no less than RM200 million. This amount is payable to PT in full upon a number of conditions, but particularly upon the issuance of the certificate of the certificate of fitness of occupation.
Significance:Unlike other developers in Singapore who have swarmed into the residential sector of Iskandar, Malaysia, Oxley has particularly avoided it which seems wise as that sector may potentially face oversupply conditions.
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