Valuation Gains Boost Koh Brothers' Profit

Source : The Business Times, February 27, 2008

PROPERTY and construction company Koh Brothers' 2007 net profit jumped almost 10-fold to $39.7 million, fuelled by exceptional items.

Net profit was boosted by valuation gains of more than $30 million and a $5.6 million gain from the disposal of subsidiaries. For 2006, Koh Brothers reported a net profit of $4.1 million.

Revenue for the year ended Dec 31, 2007 rose 10 per cent to $285.5 million - from $259.6 million the year before - as the company's construction and building materials division recorded strong numbers amid a construction boom in Singapore.

Earnings per share rose to 8.28 cents in 2007, from 0.85 cents in 2006. Koh Brothers has declared a first and final dividend of 0.3 cents a share for 2007.

The company plans to go ahead with three residential launches this year despite the property market taking a breather, chief executive Francis Koh told BT.

'In 2008 we will launch new projects such as Lincoln Lodge off Newton Road, the Alocassia Apartments along Bukit Timah Road and Florenza at Florence Road,' Mr Koh said. But the sale of units in luxury development The Lumos will be held off until the market recovers. 'At the moment the high-end and luxury markets are a bit slow but the mid-range segment is still quite good, so we will push out those projects first,' he explained.

In line with this, Koh Brothers will roll out Florenza in Florence Road, which it classifies as a mid-range property, in the second quarter of 2008.

Launches of the more upmarket Lincoln Lodge and Alocassia Apartments projects are slated for the fourth quarter, while sales of The Lumos - which is 40 per cent sold - are on hold.

Mr Koh said that if need be the company can afford not to launch any projects this year and instead wait for the market to recover, as it is in a financially strong position. Koh Brothers reduced its gearing from 4.3 to 2.1 in 2007, he said. The company also has locked in income streams for 2008. In 2007 it tied up the sale of Changi Hotel for $42 million. A gain of some $20.4 million will be seen in 2008 from the deal.

In addition, the progressive recognition of revenue from sales of units in The Lumos and the fully-sold Bungalows@Caldecott, as well as higher rental income from 50 per cent-owned mall Sun Plaza, will contribute to 2008's numbers, Mr Koh added.

The company also has construction contracts of $849 million up to 2011 in hand and intends to bid for more large-scale public-sector projects.