Low Keng Huat

Low Keng Huat


Company Profile

The Group is engaged in building construction, property development and property investment. It is one of the biggest civil engineering and construction firms in Singapore in terms of capital employed.


Half year 06FY Jan 05FY Jan 04FY Jan 03
EPS$0.04977$0.02474$0.01221$0.03406
NAV1.18561.10231.10321.0052
Current Ratio0.5171.0430.4590.545
Debt/Equity 0.5460.8830.5380.829

NAV is calculated by shareholders equity/numbers of shares



Divestment of Duxton NZ


PROPERTY developer and construction company Low Keng Huat has divested its interests in three hotel properties in New Zealand.
The aggregate consideration for the shares is NZ$52.5 million (S$60.9 million) less shareholder loans extended by the vendors to the subject NZ companies and a bank loan which stood at NZ$11.9 million and NZ$24.8 million respectively as at Jan 31.
Net proceeds from the share sale are estimated at NZ$15 million. The debt consideration of NZ$11.9 million would be fully paid. LKH, which expects a gain of about NZ$11.14 million (excluding price adjustments) from the transaction, intends to use proceeds from the sale to reduce bank borrowings and to boost its working capital.



Cash and Cash equivalents Remarks

15675000 As of 31.07.05
33125000 Sales Proceeds of NZ15 millioEquivalent of S$17.45million


Before Sale After Sale
Total Debt 115180000 72500000
NAV 1.1856 1.2927



Divestment of Chijmes


Low Keng Huat’s 50 pct-owned associate Chijmes Investment Pte Ltd agreed to sell Singapore's historical landmark Chijmes for 128 mln sgd to Suntec Real Estate Investment Trust.
The acquisition, expected to be completed on Dec 15, will have a material impact on Low Keng Huat's consolidated financial results as Chijmes Investment expects to book an exceptional gain from the sale. Chijmes' book value as of Jan 2005 was placed at 90.80 mln sgd.


Cash and Cash equivalents Remarks
51019677 Sales Proceeds of S$17.89 Million($0.42/share)


Before Sale After Sale
NAV 1.2927 1.4406
Total Debt72500000 ???
Assumption that CIPL will return all the cash proceeds.


Since CIPL is a 50% associate, we should expect a figure of at least (90.8 /2= 45.5 )millions lodged under its associate column. However a peep at its latest financial statements suggested that the total value of its associates is only worth a mere 35.99million. Can any accountant shed some light on this gaffe?


Divestment of Duxton??


LKH had in the past place its chain of hotels in the open market but pulled the plug due to differences in valuations. This time, is it for real? The jury is still out and one might have to read between the lines and inconspicuous bits of information in order to form a holistic picture.
However, it was reported in The Age that Duxton Melbourne might be the next one to go under the hammer.(Article Attached below).


Hotels Market Valuation Bank Borrowings Acquired in Year

Duxton Melbourne A38.2million A15million 1998

Duxton Perth A$60 million A23.5million 1996

Duxton Saigon No mention No mention 1993

All figured are pluck from Annual Report 05
LKH only holds a 75% stale in Duxton Melbourne and Perth
LKH holds a 70% stake in Duxton Saigon
LKH estimated investment in Duxton Saigon is US$11.9 millions.



Merits


LKH is one of the last few remaining undervalued property counter on SGX. Assuming status quo remains, at its last traded price of 67cents and NAV of $1.4406 (A figure arrived at after incorporating the sales of Chijmes and Duxton NZ), it is trading at only 0.465 of its revised NAV.
IF LKH were to liquidate their Duxton portfolio, cash per share net of debt could easily amount to 65cents per share.

Meanwhile, management has agreed to provide a breakdown on the holding costs and total borrowings for the various hotels under its portfolio as long as it is public information. Still waiting for their reply and will update in due course.



Constant high demand in conventional Melbourne attracts hotel investment
HUGH MARTIN
326 words
14 September 2005
The AgeFirst8English© 2005 Copyright John Fairfax Holdings Limited.
www.theage.com.au Not available for re-distribution.

THE impending sale of Duxton Hotel to Singaporean-owned Rendezvous Hotels for more than $40 million is a further sign of improvement to Melbourne's long-suffering accommodation and leisure market. After a prolonged period of oversupply and competition from the serviced-apartment market, the long-awaited improvement in performance within the sector was stimulating investment demand, according to CB Richard Ellis director of hotels and leisure Scott Callow. "The market has shown increased strength through a lack of planned future rooms in Melbourne, and demand remains strong because we have an endless string of events and conventions here," Mr Callow said. He said the likely Duxton sale closely followed the $39 million sale of The Windsor Hotel to Halim Group and the purchase by Eureka Funds Management of nine hotels in Australia and New Zealand for $390 million earlier this month. However, Mr Callow said investment demand was being frustrated by a lack of buying opportunities. Jones Lang LaSalle senior vice-president of hotels Mark Durran said the Melbourne market had bottomed out last year, with room occupancy rates rising and room rates tipped to grow for the first time in five years. "The demand has stood up stronger than anyone has expected in Melbourne," he said. "We are seeing the oversupply absorbed and trading performance lift and recover." He said investors were paying premium prices for property and suggested the price paid for The Windsor Hotel was well above expectations of a year ago. Mr Callow said increased demand was being experienced in the pub sector, with hotel businesses selling for between 21/2 and three times profit, gaming businesses for about 61/2 times profit and pub freeholds for up to 11 to 12 times profit. The 350-room Duxton Hotel was reopened in February 1998 after being derelict for 20 years.


New players buy into top hotels
AFNR000020050703e1740001p
PropertyBen Wilmot
804 Words04
July 2005
Australian Financial Review
First
56
English
? 2005 Copyright John Fairfax Holdings Limited. www.afr.com Not available for re-distribution.


A new breed of investor is buying up hotels as sales activity at the top end of the hotel market gathers pace across Australia.
New names such as MFS, the Ray Group, Indigo and Rockford have struck deals against stiff competition in the past year.
The incumbents such as Thakral and Accor have also been busy, but the new group believe they can ride the pick-up in hotel trading and also make astute development plays. And another feature marks them out: they all love doing deals.
In the latest tie-up to be mooted, private Queensland developer Indigo and its partner the Rockford Hotel Group are believed to be considering a tilt at the two remaining Duxton hotels in Australia, in Melbourne and Perth. Their Singaporean owner is hoping a sale will reap $100 million.
The pair are understood to have chased the Duxton portfolio when it was marketed by Singaporean property group Low Keng Huat in one line last year.
However Tanapun Siriphatrawan's Amora Group grabbed the three New Zealand hotels ahead of them for $NZ52.5 million ($48.7 million).
They are now building an Australia-wide network of four-star to five-star hotels.
In November 2004, they teamed up to buy Darling Harbour's Novotel Century for $41 million.
Their hotel venture was only recently formed. It came about as interests associated with the Horbelt family, which controls the Rockford, sold the Clarion Resort at Palm Cove to Indigo for about $25 million last year.
Indigo has been very active in the northern resort haven. In February, it announced plans to build a $250 million residential subdivision on the Novotel Palm Cove's nine-hole golf course. It acquired the entire resort from private Singaporean group Daysun for $38 million.
Brian Ray is also looking for northern exposure. He bought the two Sheraton Mirage resorts in Queensland with Gold Coast fund manager MFS for $210 million last year.
The pair are now using the upmarket hotels to market associated luxury Bale villas. MFS also have a Bale development on Victoria's ski fields.
The timing of these developers-cum-fund managers is good and their luxury focus is spot on.
The latest Australian Bureau of Statistics tourism industry figures show that Sydney's five-star hotels enjoyed stronger revenue per available room (RevPAR) growth than their four-star rivals.
For the 12 months to the end of March 2005, five-star hotels in Sydney lifted both their average daily rate and occupancy levels, resulting in a 6.83 per cent lift in RevPAR yield to $159.09.
"This bodes well for the market which has successfully weathered years of insult including severe acute respiratory syndrome, war and the collapse of Ansett," Colliers International said.
The analyst said that Sydney's hotel market would enter new terrain this year, even with the impact of the renovated Hilton Hotel opening mid-July.
Even four-star hotels in Sydney lifted their RevPAR by almost twice the inflation rate. Sydney's four-star hotel RevPAR grew by 4.72 per cent to $106.19. This comprised 2.47 per cent growth in hotel room rates to $134.53 and 2.2 per cent lift in occupancy levels to 78.9 per cent.
"Sydney's four-star hotels are enjoying average occupancy levels not seen in the last 10 years," Colliers International said. The analyst forecast more good returns because of the tight outlook for the supply of new hotel rooms.
There are few new hotels being built, or even on the drawing board. Colliers International said that when developers reviewed potential hotel sites or building conversions, alternate uses continued to rank higher than hotel use.
Melbourne's four-star and five-star hotel market continued to surprise, Colliers International said. The analyst said Melbourne was performing its way out of a hole created by significant increases to supply.
RevPAR in Melbourne's four-star and five-star hotels increased by 5.66 per cent to $102.67 in the 12 months to the end of March. Surprisingly, this was almost identical to the growth at top-end hotels in Sydney.
Sydney, which is considered the gateway for four-star and five-star hotels, had RevPAR growth of 5.77 per cent.
Melbourne hotels have held room rates steady at $140.66 as the supply has been soaked up but the demand has remained strong, with occupancy rates up by 4.2 percentage points to 73 per cent.