Keong Hong posts 38% fall in Q4 net profit to S$6m

KEONG Hong Holdings' net profit declined 37.9 per cent to S$6 million for the fourth quarter to September, on the back of greater impairment loss on investment in associates and provision of estimated credit loss for non-trade receivables and corporate guarantee liability.

The construction, hotel and property development and investment group saw its administration expense balloon to S$18.6 million or 178.5 per cent higher than the S$6.7 million reported a year ago.

This was the result of an impairment loss of S$7.2 million on investment in associates and provision of estimated credit loss for non-trade receivables and corporate guarantee liability of S$5.5 million, said Keong Hong on Thursday in a press statement for its financial results.

Consequently, this has weighed on its bottom line, which stood at S$6 million, while earnings per share was down to 2.56 Singapore cents from 4.13 cents for the year-ago period.

This was in spite of Keong Hong slashing its cost of sales by more than half (53.7 per cent), through cost savings reaped upon finalisation and settlement of accounts with subcontractors with regard to some of the construction projects.

Revenue decreased by 20.6 per cent in the fourth quarter to S$37.9 million from S$47.8 million, on lower recognition of revenue from construction projects.

Full-year net profit was 30.6 per cent lower at S$16.3 million, compared to S$23.5 million a year ago. Revenue increased by 1.7 per cent to S$162.6 million from S$159.8 million in the previous corresponding year. The increase was due mainly to higher revenue recognition from projects such as Seaside Residences condominium at Siglap, National Skin Centre and Pullman Maldives Maamutaa Resort.

It recommended a final dividend of 1.5 Singapore cents - slightly lower than last year' two cents - to be approved by shareholders for payment in February 2020.

Chief executive Ronald Leo said the construction sector did better than most other sectors, posting a year-on-year 2.9 per cent improvement in the third quarter of 2019, supported by a pick-up in the public and private-sector construction activities. Nevertheless, the sector is still not out of the woods as it registered a 0.1 per cent contraction on a quarter-on-quarter seasonally adjusted annualised basis.

"The award of contracts from redevelopment of en bloc acquisitions will probably be rolled out more intensively next year. In the medium term, the sector is likely to feel the headwinds of the slowdown in the global economy, although support should come from public sector infrastructural, industrial, commercial, institutional and community projects. As such, our focus will continue to be on pursuing projects in these areas, " said Mr Leo.

Keong Hong shares were 0.5 Singapore cent or 1.08 per cent higher at S$0.47 on Thursday before the results were announced.