Excerpts from analysts' reports

OCBC Investment Research highlights KSH Holdings' successful launch of Beijing condo project

Analysts: Eli Lee & Kevin Tan

KSH_choocheeonnKSH executive chairman Choo Chee Onn. Photo: annual reportKSH Holdings reported 3QFY14 PATMI of S$9.9m, up 22% YoY, mostly due to increased contributions from the construction and property development segments.

9MFY14 PATMI cumulates to S$33.5m, up 50.3%, and makes up 69% of our full year forecast.

We judge this to be mostly within expectations, and anticipate a back-loaded year in terms of revenue recognition from construction and development projects.

In Jan-14, the group launched its 45%-owned Beijing condo project (Liang Jing Ming Ju Phase 4) and saw a strong performance.

Over 60% of the residential units (comprising a total net sellable area of 31.4k sqm) were sold at average prices of RMB 23.5k psm – higher than previously anticipated – and we expect this project’s contribution to drive continued earnings growth in FY15 as it achieves TOP.

Maintain BUY with an unchanged fair value estimate of S$0.73.

KSH_chart2.14KSH stock (46.5 cents) has come off from the 52-week high of 61.15 cents achieved in mid-2013. Its trailing PE is 4.1X and dividend yield is 5.2%. Chart: FT.com

Recent story:  SUMER: "My latest take on Hiap Hoe, Heeton, Pollux and KSH"

OSK-DMG maintains 'buy' call on King Wan Corp with 43-c target

Analyst: Lee Yue Jer

KWAN reported a breakeven 3Q14 largely due to accounting policy and slower-than-expected property sales at the associate level.

We expect a strong margin rebound in 4Q14 and see little risk to our 1-cent final dividend forecast.

We expect KTIS’ IPO, which has been postponed again due to Thailand’s political turmoil, to be in mid-CY14.

Shareholders are being paid to wait. Maintain BUY, with our SGD0.43 TP based on a 7% yield.  

KingWan_chart1.14King Wan's 5-year chart by Bloomberg.

Accounting policy drags 3Q14 margin and profit down.
 KWAN’s conservative recognition method means that no margin is recognised in the early stages of the project, leading to large fluctuations between quarters. As such, margin comparisons are more meaningful at the full-year level, and we expect a healthy 15% gross margin for FY14-15F. 

chuaengeng_KWChua Eng Eng, MD of King Wan Corp. Photo: CompanyCooling measures hurt property sales. The recent property-cooling measures caused sales at the Starlight Suites and the Skywood to be slower than expected, leading to a loss at the associate level. We expect contributions from property sales to be booked only in FY15-17F.   

Strong mechanical & electrical (M&E) orderbook and operations support core dividend. As of today, KWAN has an orderbook of SGD166m, providing two years of revenue visibility. Order win momentum is strong, with the company announcing a SGD41.8m package of contracts two days ago. 

We believe its orderbook will grow further as more Housing Development Board (HDB) contracts are awarded. We maintain a 1.5-cent annual core dividend outlook.   

Awaiting Thai resolution. Kaset Thai Industry Sugar (KTIS)’ IPO deadline has been extended by another six months to Aug 2014 due to the political turmoil in Thailand. 

We now expect the IPO and the distribution of a 1.5-cent special dividend from the part-sale of KWAN’s stake in mid-CY14 (c. 2Q15).   

Maintain BUY; SGD0.43 TP. Our view on KWAN as a stable and dominant M&E player in Singapore is fundamentally unchanged. Our SGD0.43 TP is based on a 7% FY15F forward yield, including the special dividend. 

Recent story: KING WAN CORP - A Future Worth Buying Into?

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