Low Keng Huat sinks into red with H1 loss on slower project sales, disposal loss

MAINBOARD-LISTED property firm Low Keng Huat (Singapore) has sunk into the red with a S$24.1 million loss for the half year to July, from a S$25.1 million net profit in the year-ago period.

Net loss for H1 FY2023 was mainly due to slower property sales for the development segment and the S$23.3 million loss on disposal of investment in associates, the company said in its financial statement filed to the bourse on Wednesday (Sep 14).

Revenue declined 44 per cent to S$49.8 million from S$88.9 million.

Low Keng Huat has 3 main segments: development, hotel and investment. Notably, all 3 segments were in the red, although its hotel business managed to reduce loss, compared to the corresponding period a year earlier.

Development revenue dropped by about two-thirds to S$19.5 million from S$67.2 million. Only 7 units out of 138 in Klimt Cairnhill were sold as at end-July despite the residential project being launched in August 2021. Klimt Cairnhill is a 36-storey, high-end freehold condominium development located in the Orchard vicinity.

The segment registered a loss of S$372,000 before tax and non-controlling interest.

However, the hotel segment and investment segment both reported higher turnover.

Revenue from the hotel segment increased to S$16.5 million from S$9.9 million as occupancy rates and average room rates at Duxton Hotel Perth and Citadines Balestier improved. Lyf @ Farrer also commenced operations in February 2022, contributing to revenue as its occupancy averaged 80 per cent.

Net loss before tax and non-controlling interests for the hotel segment decreased by S$1.1 million to S$1.6 million.

Revenue from the investment segment rose to S$13.8 million from S$11.9 million, mainly driven by construction revenue from the Dalvey Haus project, a residential development project 40 per cent owned by the group. The construction of Dalvey Haus project was 52 per cent completed as at end-July.

Net loss before tax and non-controlling interests for the Investment segment was S$20.7 million, compared to a profit of S$28.9 million a year earlier, due to a loss on disposal of investment in associates.

Net tangible assets per share for the group as at end-July amounted to S$0.86, slightly lower than S$0.91 as at end-January.

No dividend was declared as it is "not the usual practice of the group to declare interim dividend".

Low Keng Huat said the group will focus on the completion and sales of existing residential development projects. The easing of cross-border travel restrictions and the resumption of global travel should result in improved room rates and occupancies for its hospitality assets.

Suburban retail mall rents and occupancies are expected to be stable, supported by a recovery in consumption, a return of office workers that lead to larger lunch crowds, and its focus on non-discretionary shopping, it noted.

Low Keng Huat shares ended 3.5 per cent or S$0.015 higher at S$0.445 on Wednesday, before the results were released.

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