KSH reported 1QFY15 PATMI of S$9.6m, down 15.7% YoY mostly due to lower contributions from both the construction and property development segments and a weaker share of profits from associates given lower progress recognition at JV development projects. We judge this set of results to be mostly in line with expectations and 1QFY15 PATMI now make up 27.6% of our full year forecast. In terms of the topline, 1QFY15 revenues also decreased 14.6% YoY to S$62.5m as construction revenues dipped 15.0% YoY to S$60.9m while development revenues ceased given the TOP of Lincoln Suites.

KSH’s order book for its construction segment remains fairly healthy at S$490m as at end Jul-14, having recently clinching a S$147.8m public sector project for the design, construction, completion and maintenance of an integrated Community Building. The group continues to enjoy a strong balance sheet with S$104.5m in cash and a low gearing of 2%. Maintain BUY with an unchanged fair value estimate of S$0.71.

Source: OCBC Research - 13 Aug 2014