Low Keng Huat (Singapore) Limited: Interim Financial Analysis for 1HFY2026

Low Keng Huat (Singapore) Limited (“LKHS”) has released its condensed interim financial statements for the six-month period ended 31 July 2025 (1HFY2026). The report provides a comprehensive view of LKHS’s performance across its property development, hotel, and investment segments, offering investors valuable insights into the Group’s financial health and strategic direction.

Key Financial Metrics and Performance Comparison

Historical Performance Trends

LKHS experienced a sharp decline in revenue and profit in 1HFY2026 compared to the prior period. The drop is primarily attributed to the completion of the Klimt Cairnhill property development project, with only residual revenue recognized during the reporting period. As a result, both revenue and gross profit fell by over 80% year-on-year. The Group swung to a net loss of \$10.0M, from a \$5.7M profit last year. EPS turned negative, and net asset value per share decreased slightly.

Segmental Review

• Property Development: Revenue fell to \$6.9M from \$225.4M as Klimt Cairnhill reached completion. The segment recorded a loss of \$6.4M, compared to a profit of \$8.8M last year, due to lower revenue and additional completion costs.
• Hotel: Revenue declined modestly to \$22.6M, from \$23.0M. Improved performance at Duxton Hotel Perth and cost reductions at Citadines Balestier and Carnivore restaurant led to a segment profit of \$0.4M, reversing a \$1.1M loss last year.
• Investment: Revenue decreased to \$9.2M from \$9.5M, mainly due to lower rental rates at Paya Lebar Square following a tenant exit. Segment loss before tax widened to \$1.5M, reflecting asset write-offs and fair value/FX losses on the Australian property fund.

Exceptional Expenses and Events

• Asset Write-Offs: \$0.5M of assets at Paya Lebar Square were written off, tied to an air-conditioning upgrade for energy efficiency.
• Fair Value and FX Losses: \$0.4M fair value loss on the Australian property fund and \$0.2M in FX losses contributed to the bottom-line decline.
• Tax Impact: Tax expense rose to \$2.6M (from \$0.9M), mainly due to tax recognized upon TOP for Klimt Cairnhill.

Balance Sheet and Cash Flow Highlights

• Total Assets: Fell to \$947.5M from \$1,091.0M, reflecting project completion and cash application to reduce borrowings.
• Borrowings: Dropped by \$119.2M to \$328.9M, improving net gearing from 0.62 to 0.32.
• Cash & Equivalents: Rose to \$142.6M, up \$67.9M, driven by progress billings at Klimt Cairnhill.
• Working Capital: Stood at \$94.1M.

Dividends

No interim dividend was declared for 1HFY2026, in line with the Group’s usual practice. The previous ordinary dividend paid was 1.5 cents per share for the last financial year.

Chairman’s Statement and Outlook

“Singapore’s economy grew 4.4% in Q2 2025… Although the first half outperformed expectations, risks persist for the remainder of the year due to softer global demand stemming from US tariffs and a reduced boost from earlier front-loading amid slowing global trade.

Against this backdrop, the real estate sector expanded 5.2% year-on-year in Q2, led by private residential property sales. The accommodation sector also saw a 2.4% increase, rebounding from a Q1 decline, supported by a rise in visitor arrivals.

Looking ahead, the outlook for property developers remains stable but cautious amid ongoing global and domestic uncertainties… With the completion of the Klimt Cairnhill project, revenue from the development segment is projected to decline in FY2026. To drive future growth, the Group, together with a joint venture partner, secured a residential site at Canberra Crescent in August 2024, holding a 30% equity stake. The project, Canberra Crescent Residences, was launched in July 2025, with over 50% of units sold to date. In parallel, the Group continues to explore new acquisitions and investments, including landbank expansion, to ensure sustainable shareholder returns amid a shifting economic landscape.

The Duxton Hotel Perth is expected to benefit from ongoing refurbishment works. However, growth in the serviced apartment segment will likely remain modest… Paya Lebar Square mall continues to maintain healthy occupancy levels, despite softer consumer spending, increased outbound travel, and intensifying e-commerce competition. The mall’s operational performance is expected to remain resilient.

Management remains focused on financial discipline, enhancing asset value through quality development, asset recycling, and positioning the Group for sustainable long-term growth.”

The statement is neutral to mildly positive in tone, acknowledging short-term headwinds but highlighting strategic initiatives and disciplined management.

Corporate Actions & Other Noteworthy Items

• No interim dividend declared.
• No share buybacks, placements, or mandates.
• No significant divestments, IPOs, or asset sales in the period.
• No new subsidiaries or associated companies formed or acquired.
• Confirmation of directors’ and executive officers’ undertakings as per SGX requirements.
• Related party transactions: Service fees, secondment fees, and shareholder loans were extended to joint ventures and associates, but all at arm’s length and disclosed.
• No material subsequent events after period end.

Conclusion & Investment Recommendations

Overall Assessment: LKHS’s financial performance in 1HFY2026 is weak, mainly due to the wind-down of its flagship property development project and a lack of new major revenue drivers in the period. The Group’s balance sheet is strong, with significant cash reserves and lower gearing, but recurring earnings have diminished sharply. The outlook is mixed: while new projects (e.g., Canberra Crescent Residences) may provide future upside, current profitability is subdued and revenue is expected to remain soft until new developments contribute meaningfully.

Investor Recommendations

• If you are currently holding LKHS shares:
  Consider maintaining a cautious stance. The Group is financially robust and has proven asset management capability, but near-term earnings visibility is poor. If you are a long-term investor, you may wish to hold and monitor progress on new development launches and asset recycling. However, if you are seeking growth or dividend income, you might consider reducing exposure or reallocating to higher-growth opportunities.
• If you are not currently holding LKHS shares:
  It may be prudent to wait for clearer signs of earnings recovery or new project contributions. The Group’s strong balance sheet and proven execution provide downside protection, but the lack of near-term catalysts and absence of interim dividends make it less attractive for new positions at present. Consider revisiting the stock once Canberra Crescent or other new projects show meaningful profit recognition.

Disclaimer: This analysis is based solely on publicly disclosed financial statements and does not constitute investment advice. Investors should perform further due diligence and consider their own investment objectives and risk tolerance before making any decisions.

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