Finally Keong Hong has released their annual results, when other counters in my portfolio released much earlier in November. I have high expectation in this counter, and I guess its 2018 Annual Result didn't disappoint me.
The 12 months revenue down 29.4% or 69 million. Sounds bad, but the management explained it was mainly due to lower recognition of revenue from construction projects as some of the projects had largely been completed in the previous financial year (well but I guess I have always see this line in its financial report). Fortunately, the company managed to win some projects in FY2018, including National Skin Centre and Mattar Road condo contract, and the order book stood at approximately 376.1 million and last year it was around 344 million at the end of financial year. The company shows that it has the ability to win contracts continuously, however I was concerning about the revenue in Q4 as it down 45.6% or 45 million. In its Annual Report 2017 the company disclosed that they recognise the revenue based on the output method, and the company won its major contracts in earlier this year so I believe that "some of the projects had largely been completed in the previous financial year" didn't fully explain the performance of its revenue. 1.1% of the total revenue was from the investment property in Japan, and I went back to 2017 Annual Report and found the investment property segment asset is around 23 million SGD. So the rental income is around 1.65 million so the rental yield is around 7%, while the interest rate of the term loan secured by the investment property is around 2.6%. Guess it is a good business. COGS down more than revenue so in fact the changes in its gross profit figure is still acceptable.
Impressively, the company recorded positive results from its joint ventures and associates after disappointing result of associates in Q4, compared to negative results in previous year. Hopefully these are not due to one one-time gain. The company's net profit down 66% or 42 million, but if we remove the one-time gain from previous year, the result is actually better than previous year. To be honest I still don't understand the logic behind the one-time revaluation gain, as the company is not going to sell its joint venture and it is not a listed company, so the main consequence of such revaluation is that the result looks good on its face. I personally excluded that revaluation gain when looking into this company, as it won't turn to cash in any foreseeable future (at least the management never disclose that they are planning to sell it).
The company disclosed that the Mercure Maldives Kooddoo Resort has been conferred the Global Winner of the 2018 Luxury New Resort awarded by The World Luxury Hotel Awards. It sounds amazing, but when I check the website of The World Luxury Hotel Awards, there is 4 Global Winner in Maldives. Guess it is not as impressive as it sounds, but at least it is a quality confirmation and recognition. The hotel's rating on Booking.com is 9.2/10, quite good, but it is based on 32 reviewers only. Hope more people can give their comments and review online so we can understand more about this business.
The company is going to give 2 cents final dividend for this financial year! In total the dividend for FY2018 is 2.5 cents and it is a 5% dividend yield at current share price. Since the company is still trading at a discount to its NAV with low PE, higher dividend will contribute to my cashflow and I will have chance to add more in the future.
Looking forward to attend its AGM in January.
Cheers.
No comments:
Post a Comment