by winston » Fri Nov 30, 2012 5:02 pm
not vested
Our recent meeting with Low Keng Huat suggests the company is sitting pretty after chalking up robust sales for its commercial and residential developments, with good earnings visiility over the next few years.
At Paya Lebar Square, its commercial and retail project next to the Paya Lebar MRT interchange, the
strata-titled office space of 430,000 sf is over 90% sold at an average price of $1,750 psf, while the 95,000 sf retail component achieved leasing commitments for more than 60% of the space available at rates of
$16-17 psf pm.
Parkland Residences, its DBSS project at Upper Serangoon Road, meanwhile, has issued options for 70% of
the 680 units available. And its earlier JV residential project with Kheng Leong, the Minton, is 100% sold.
All this suggest a steady stream of profit recognition over the next 2-3 years: The Minton in 2012-2013,
followed by Paya Lebar Square and Parkland Residences in 2014-2015.
Beyond property development, LKH is one of the largest general building and civil engineering companies in Singapore as an A1 registered general building contractor and owns hotels in Australia and Vietnam.
The company has generated pretax profits of over $100m p.a. for the past two years, and we expect earnings
to remain robust going forward underpinned by the healthy pre-sales for its property projects.
This should enable it to sustain its dividend payout of 4 cts per annum, translating to an attractive yield of
over 8% at the current price. Trading at a 56% discount to our RNAV of $1.09, we think the counter is attractively-priced on all counts.
Source: DMG
It's all about "how much you made when you were right" & "how little you lost when you were wrong"