Write-backs help push Koh Bros Q4 net profit up by 74% to S$12m

KOH Brothers Group braved a slide in sales to turn in a sharply higher fourth-quarter net profit on Tuesday - fuelled largely by various write-backs.

Earnings for the three months to Dec 31 grew by 74 per cent on the previous year, to S$12.17 million.

This was even as revenue plunged by 21 per cent to S$125.1 million, pulling down gross profit.

The rise in net profit was helped by a positive credit of S$5.58 million in the "other expenses" row, mainly due to write-back allowance made for impairment of loan to joint ventures.

Distribution expenses also recorded a credit - to the tune of S$919,000 - compared with expenses of S$980,000 in the same period the year before, thanks largely to write-back of allowance made for impairment on trade receivables.

These gains helped to offset the 51 per cent slide in Koh Brothers' share of results from joint-venture companies, which fell to S$5.96 million for the quarter because of a higher fair-value gain recognised on an investment property in the previous year.

Earnings per share for the three months stood at 2.94 Singapore cents, up from 1.69 Singapore cents before.

For the full year, the mainboard-listed company posted a 49 per cent rise in net profit, to S$19.83 million, on a 7 per cent increase in sales, to S$369.43 million.

The surge in full-year earnings came on the back of profits recognised for the Westwood Residences executive condominium project and gains from the bulk sale of The Lumos.

The group has declared a final dividend of 0.6 Singapore cent a share, up from the dividend of 0.35 Singapore cent in the same period the year before. This will be accompanied by a special dividend of 0.4 Singapore cent a share.

Koh Brothers noted in its announcement on the Singapore Exchange website: "Although the construction sector remains challenging on the back of a competitive environment, being an established building and civil engineering contractor, the group is well poised to actively participate in the tender for more construction projects."

The group is "cautiously optimistic about the outlook for the private residential market", it added, and will pursue acquisitions "as and when opportunity arises".

Managing director and group chief executive Francis Koh said in a statement: "In the coming year, we'll focus our efforts on the launch of our Gangnam project in South Korea by (the second half of 2018), as well as keep a lookout for attractive sites to replenish our land bank, both in Singapore and abroad."

In a climate of rising land prices, building up a Singapore land bank might involve working with other developers, "for better diversification of risks and efficient use of capital", he said.

Mr Koh added that the group's construction arm, which now has an order book of S$762.7 million, "will continue to actively participate in tendering for large-scale public projects".

Koh Brothers closed up by S$0.01, or 3.03 per cent, to S$0.34, before the announcement.