KSH Holdings Ltd - CIMB Research 2018-01-18: Expansion On The Cards

KSH Holdings Ltd - CIMB Research 2018-01-18: Expansion On The Cards KSH HOLDINGS LIMITED ER0.SI

KSH Holdings Ltd - Expansion On The Cards

  • KSH Holdings Limited is a construction and property firm with numerous investments in Singapore, Japan, China and the UK.
  • Its Gaobeidian project is likely to benefit from rising housing prices in the vicinity of the Xiongan SEZ and Phase 1 may be launched this year, according to management.
  • Its overseas properties in Singapore, the UK, Japan and China offer recurring income streams.
  • Expanding on the back of rising property development in Singapore and overseas.
  • Trading at 1.41x 1HFY3/18 P/BV and at 12% discount to RNAV.

Construction and property group 

  • KSH Holdings Limited  is a well-established construction, property development and property investment group in Singapore. 
  • In FY17, c.97% of its revenue was derived from the construction business and the balance from the property development arm. Around 33% of FY17 pretax profit (PBT) was generated by its property development and investment operations.

Gaobeidian Phase 1 could be launched this year 

  • Following the Apr 2017 announcement of China’s new special economic zone (SEZ) in Xiongan New Area in Hebei, KSH Holdings sees its 22.5%-owned Gaobeidian project as a likely beneficiary of rising house prices in the area, as the project is located near the SEZ, based on media reports. 
  • According to management, the project consortium targets average selling prices of up to Rmb20,000 psm for its residential units. The consortium expects to launch Phase 1 in 2018F after a pre-sales permit is obtained from authorities.

Extending development footprint in Singapore and overseas 

  • Its current development pipeline in Singapore includes residential projects High Park Residences (99.7% sold at end-FY17) and Rezi 3TWO (95.4% sold at end-FY17), as well as commercial project Trio. It has a 35% stake in the Rio Casa site, which was acquired en bloc in May 2017 with potential 1.1m sq ft GFA in residential space. 
  • Overseas, ongoing developments include a 15%-owned 192-room hotel in Leeds, UK, and a 5%-owned 324- unit residential development in Brisbane, Australia.

Overseas properties provide recurring income stream 

  • On the property investment front, KSH invests in property assets in Singapore, the UK, Japan and China. 
  • Its investment assets include a 69%-owned 36-storey retail and office complex, Tianxing Riverfront Square, in Tianjin, China, several hotel assets in the UK and hotel and residential properties in Sapporo, Japan – all which provide rental income streams with potential capital gains.

Trading at 1.41x P/BV, at 12% discount to RNAV 

  • KSH Holdings had a net cash-to-equity position of 0.08x at end-Sep 2017. It paid FY17 DPS of 3.25 Scts, which translates into 4.0% dividend yield. 
  • The stock is currently trading at 1.41x 1HFY18 P/BV and 11.1x FY18F P/E (Bloomberg consensus estimates). 
  • It is trading at a 12% discount to RNAV of S$0.91, with RNAV based on latest market transacted data.

Target Price: N/A

Colin TAN CIMB Research | http://research.itradecimb.com/ 2018-01-18
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* This Eyes On the Ground report represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.