Low Keng Huat profit down 76%

Low Keng Huat profit down 76%

By TETTYANA JASLI

PROPERTY firm Low Keng Huat (Singapore) yesterday reported a 76 per cent fall in net profit for the year ended Jan 31, 2007 - but only because there was no one-time gains.

Net profit came to $13.1 million, down from $54.6 million the previous year where there was one-off pre-tax gains of $68.3 million from the sale of assets.

The company said yesterday that if one-time gains were excluded, and notwithstanding a smaller asset base, net profit rose 90 per cent from $6.9 million previously.

An increase in revenue to $117.3 million from $106.2 million previously was largely due to higher contribution from construction jobs in progress. This more than offset the absence of contribution from four hotels sold in the second half of the year ended Dec 31, 2006.

Earnings per share came to 10.67 cents, down from 44.42 cents a year earlier.

The group said that the construction industry will remain competitive. It has a number of projects in hand in which it has an equity interest, and will seek new projects that are reasonably priced.

Its current development projects include a luxury condominium in Duchess Avenue to be launched in mid-2007 and a high-end service apartment development near the Kuala Lumpur City Centre to be launched later this year. These projects are expected to contribute to profit in the next few years.

The group is also looking to ride on the growing Malaysian economy and the Iskandar Development Region and is expanding its land portfolio in south Johor for future development.

The group has declared a first and final cash dividend of 2.5 cents per ordinary share less tax. It has also proposed a special cash dividend of 90 cents per ordinary share less tax.

Yesterday, it also proposed a 2-for-1 rights issue of up to 246.27 million new shares at an issue price of 36.9 cents. This represents a discount of 82 per cent to Monday's closing price of $2.05 per share on the Singapore Exchange.

The group has appointed UOB Asia the manager for the rights issue.

The issue is aimed at strengthening the group's capital base after payment of the special dividend that passes on Section 44A tax credits to shareholders.

Assuming the special dividend is used to subscribe for the rights shares, the rights issue will in effect transform this portion of retained profits into paid-up capital.