KSH Holdings' FY19 results were below expectations. FY19 revenue increased 51.4% to S$200.0m. However, on higher construction costs, profit from operations before share of results from joint ventures and associates declined 18.9% YoY to S$21.1m.

Based on the new IFRS guidelines, borrowing costs relating to residential development properties that are ready for its intended sale should not be capitalised and instead, be expensed when incurred. As a result, the group's share of results from associates and joint ventures was negatively impacted.

The share of results from associates worsened from a loss of S$2.6m in FY18 to a loss of S$13.6m in FY19 while that from joint ventures also worsened from a profit of S$12.3m in FY18 to S$4.2m in FY19. PATMI declined 74.8% to S$7.7m.

We place our Buy rating and fair value of S$0.81 under review pending further details.

Source: OCBC Research - 31 May 2019