Low Keng Huat Update1

LKH is a value play( the kind of stock Peter Lynch would yearn for), hence the dearth of a exciting growth story. The catalyst is the divestment of non-core assets such as Chijmes, Duxton NZ and possibility Duxton Melbourne and Perth. In the foreseeable timeline of 1-2 years, cash/share net of debt could easily surpass the current share price of 68cents.

The attraction of LKH lies in its cash hoard, hence future earning streams that are likely to come online such as Twin Regency, Domain 21, Regency Suites etc are omitted from the analysis.

Recently, I called up the company to enquire about the possibility of providing me with a breakdown of their holding cost(net book value) and total borrowings of individual hotels under their portfolio. Thrilled by their response that they will answer all queries that is public information. I waited diligently for their reply.
To my dismay, the response by the finance director 3 days later was, the information can be partially gleaned from the Item 38 of the AR which is a geographical breakdown of their total assets and liabilities. However, as their assets are not marked to cost, it provide little or no value in computation of the net book value of their hotels.

Since management is not forthcoming with their disclosure of public information, I shall pursue the matter no further and wait fervently for the announcement of their FY financial statements out in March 06 to gain a more comprehensive picture of their financial standing.

I suspect LKH is raising cash to dole out some scrumptious dividends so as to utilize their S44 tax credit, however their reply got me so peeved that I will only raise the question at their upcoming AGM.

I had incorporated the liquidation of Duxton NZ into my above analysis, however a complete analysis of their cash and debt standing proved to be impossible due to the dearth of details from their Chengdu Amara and Chijmes divestment, henceforth my analysis contain a certain degree of conjecture and postulation.

Will go into seclusion till their FY financial statement is out, as vultures are spotted in both the “mother” and “son”.