KSH Holdings’ (KSHH) 2QFY19 PATMI increased 11.6% YoY to S$4.4m, lower than our expectations due to a decrease in construction margins. Revenue increased 58.2% to S$35.2m while profit from operations (before share of results from associates and JVs) dropped by S$1.4m YoY to S$1.2m mainly due to a higher cost of construction.

However, the share of results from JVs and associates increased by S$1.5m YoY to S$3.4m due to an increase in profit recognised from High Park Residences, and the gain from disposal of subsidiaries by an associated company, which held strata units in Prudential Tower.

PBT ended flat at S$4.7m (up 1.6% YoY) while PAT increased 9.9% YoY to S$4.5m on the back of lower income tax. KSH’s order book stands at >S$553.0m as at 30 Sept 2018, and is to be progressively recognised up to FY2022.

Looking ahead, the group is cautiously optimistic on the outlook of its performance for FY2019. We maintain BUY but place our fair value S$0.94 under review.

Source: OCBC Research - 15 Nov 2018