Financial Report Analysis for Low Keng Huat (Singapore) Limited Financial Year Ended 31 January 2025
Business Description: Low Keng Huat (Singapore) Limited is a Singapore-based company primarily engaged in property development, ownership and operation of serviced apartments and a hotel, as well as investment holding [[p13]]. The company operates through three main business segments: Property Development, Hotel, and Investment.
Financial Statement Analysis: Income Statement:
Revenue increased by 31% to $482.7M in FY2025 from $367.7M in FY2024, driven by higher contributions from the Property Development and Hotel segments [[p3]].
Gross profit increased by 4% to $62.2M in FY2025 from $60.1M in FY2024, but gross profit margin declined to 13% from 16% due to a higher percentage of contribution from the lower-margin Property Development segment [[p4]].
Profit before fair value changes, other losses (net) and taxation decreased by 19% to $6.2M in FY2025 from $7.6M in FY2024, mainly due to lower average prices for the remaining units sold at the Klimt Cairnhill project and reduced share of profit from associates and joint ventures [[p12]].
Net profit attributable to shareholders was $2.1M in FY2025, compared to a net loss of $1.1M in FY2024. The net profit for the year was affected by fair value losses on financial assets, net foreign exchange losses, and impairment losses, though partially offset by a gain from the write-back of an impairment loss on an investment property [[p12]].
Balance Sheet:
Total assets decreased by $125.0M to $1,091.0M as at 31 January 2025, mainly due to a reduction in development properties following the sale of all units at the Klimt Cairnhill project [[p26]].
Total liabilities decreased by $114.5M to $480.8M as at 31 January 2025, primarily due to net repayments of bank borrowings. The Group’s net gearing ratio improved to 0.62 as at 31 January 2025 from 0.76 as at 31 January 2024 [[p26]].
The Group’s working capital (current assets – current liabilities) was $259.3M as at 31 January 2025 [[p27]].
Cash Flow:
The Group generated $160.3M in operating cash flows in FY2025, primarily from the sale of units and progress billings at the Klimt Cairnhill project, as well as recurring cash flows from its retail and hospitality portfolio [[p27]].
Cash and cash equivalents and fixed deposits decreased by $9.0M to $74.7M as at 31 January 2025, as the cash generated was used to repay bank borrowings, pay interest, and advance loans to associated companies and joint ventures [[p27]].
Dividend:
The Board has proposed a first and final tax-exempt (one-tier) ordinary dividend of 1.5 cents per share for FY2025, amounting to $11.1M [[p20]].
Recommendation: For Existing Shareholders: Based on the financial analysis, the company’s performance has shown mixed results. While the Property Development segment remained the largest contributor to earnings, the Group’s overall profitability was impacted by fair value losses, foreign exchange losses, and impairment charges. However, the company has maintained a strong financial position with improved net gearing and working capital. Given the proposed dividend payout, existing shareholders may consider holding their position.
For Potential Investors: The company’s revenue and earnings growth have been uneven, with the Property Development segment facing margin pressures and the Hotel segment reporting losses. While the Investment segment showed some improvement, it continues to be affected by fair value and foreign exchange losses. Potential investors may want to closely monitor the company’s ability to navigate the evolving market conditions and improve its overall profitability before considering an investment.
Disclaimer: This report is based solely on the information provided in the financial statements and does not constitute investment advice. Investors should conduct their own due diligence and consider their investment objectives, risk tolerance, and financial circumstances before making any investment decisions.
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