Low Keng Huat says it can withstand short-term cash flow pressures from Covid-19

MAINBOARD-LISTED builder Low Keng Huat (Singapore) said in a regulatory filing on Sunday that it will be able to withstand short-term cash flow pressures due to the Covid-19 pandemic on the back of its liquidity and support from banks. 

As at Jan 31, 2020, the company has cash and cash equivalent of S$68.6 million and unused available banking lines of S$194.0 million.

"Approximately 92 per cent of our loans are long term in nature and are secured against our properties. We also expect disposal proceeds of S$67 million from the partial sale of our investment in AXA Tower in June 2020," it said in response to whether the company's balance sheet is strong enough to withstand cash flow pressures amid the pandemic. 

The company was responding to questions received from the Securities Investors Association (Singapore), or Sias, and shareholders ahead of its annual general meeting on June 16. 

"Of course, given the dynamic nature of the pandemic at hand and any further deterioration of the economy over a prolonged period due to Covid-19, this would necessitate a further review of which we are sparing no effort in doing so on a day-to-day basis," it added. 

In the midst of the downturn, the group said, it will focus on the successful completion and sales of development projects and optimising operational requirements in investment and hotel segments. It will also continue to be "selective and strategic" in acquisitions and remain disciplined in capital management.

On whether the company has plans to undertake cost-cutting measures, it said that it will postpone non-critical capital expenditure to conserve cashflow and will focus on increasing revenue from development projects and retaining tenants at its investment properties. 

In response to shareholders' concerns regarding poor outlook for the food and beverage (F&B) sector, the group said that it plans to maintain its F&B business at Carnivore Brazilian Churrascaria, and will focus on cost reduction initiatives and implementing new channels of sales including enhancement of digital marketing.

Shares of Low Keng Huat closed on Friday at S$0.39, down half a Singapore cent or 1.3 per cent.