Keong Hong Holdings Limited: Q3 and 9M FY2025 Financial Analysis

Keong Hong Holdings Limited (“Keong Hong”) has released its unaudited condensed interim financial statements for the nine months ended 30 June 2025. This analysis summarizes the key metrics, provides a comparative review, and highlights notable corporate developments and strategic considerations for investors.

Key Financial Metrics and Performance Trends

Financial Highlights and Analysis

• Revenue: While Q3 FY2025 revenue declined 20.5% YoY due to the near completion of several projects and fewer ongoing projects, the 9M FY2025 revenue increased 25.8% YoY, driven by progress on ongoing construction projects.
• Profitability: The Group posted a Q3 net loss of S\$1.8 million, a narrower loss compared to S\$2.3 million in the same period last year. However, for the nine months, the Group delivered a turnaround with S\$5.7 million net profit versus a S\$11.8 million loss in 9M FY2024.
• Gross Profit Margin: Improved to 12.1% in Q3 FY2025 (vs 3.1% in Q3 FY2024) and 7.7% for 9M FY2025 (vs -1.3% for 9M FY2024), reflecting recovery from higher construction costs in pre-pandemic projects.
• Other Income: Increased mainly due to higher proceeds from sale of scrap steel and higher rental income from warehouses and dormitories.
• Administrative Expenses: Rose 163% YoY in Q3 FY2025 due to a significant foreign exchange loss, but fell 18% for 9M FY2025 due to lower depreciation and reduced staff costs.
• Finance Costs: Decreased 18% YoY in Q3 and 28% YoY in 9M, due to lower borrowings.
• Dividends: No interim or final dividends were declared for the quarter or nine months, in line with the previous year, as the Group continues to prioritize cash conservation.

Balance Sheet and Cash Flow Review

• Non-Current Assets: Decreased by S\$2.4 million during 9M FY2025, mainly due to depreciation and lower value of associates.
• Current Assets: Fell by S\$8.3 million primarily due to the disposal of non-current assets held for sale (S\$34.1m), partially offset by higher cash balances from the sale.
• Current Liabilities: Decreased by S\$15.5 million, mainly from lower trade payables and provisions.
• Net Cash Position: The Group generated a net cash inflow of S\$14.4 million in 9M FY2025, driven by cash from operations and asset sales, offset by loan and lease repayments.

Strategic and Corporate Developments

• Divestments: The Group completed the disposal of its 20% stake in Katong Holdings Pte Ltd on 30 June 2025. This resolves the audit qualification related to equity accounting for this asset and strengthens the balance sheet.
• Order Book: As of 30 June 2025, the construction order book stood at S\$229 million, with a balanced mix of residential (53.5%) and commercial projects.
• Asset Valuation and Audit Issues: All previously outstanding audit issues have been addressed and disclosed.
• Related-Party Transactions: Notable transactions during the period include interest payments of S\$389,000 to controlling shareholder LJHB Capital (S) Pte Ltd and S\$231,000 to substantial shareholder/director Leo Ting Ping Ronald. No new share buybacks, placements, or mandates were undertaken.
• No Dividends: The Group did not recommend any dividends, citing the need to conserve cash amid ongoing challenges in the business environment.

Macroeconomic and Sector Outlook

The Singapore economy grew by 4.4% YoY in Q2 2025, with the construction sector up by 6%. The outlook for construction is positive, underpinned by both public and private sector demand. However, the property market has seen a slowdown in new home sales, and the hotel segment in the Maldives faces competitive pressures, especially in the upper midscale market. No new hotel developments are planned.

Executive Commentary and Tone

The management commentary is cautiously optimistic, noting the improved results and resolution of legacy issues, but remains prudent due to market uncertainties and the need to maintain liquidity. The tone reflects confidence in operational recovery but acknowledges sector volatility and global risk factors.

Conclusion and Investor Recommendations

Overall Assessment: Keong Hong has executed a notable turnaround in its profitability for the nine months ended June 2025, supported by strong revenue growth, improved margins, and effective cash management. The completion of the Katong Holdings divestment removes a major uncertainty and strengthens the balance sheet. However, ongoing concerns include sector competition, exposure to cyclical construction and property markets, and the lack of dividends.

• If you currently hold the stock:
  Investors may consider maintaining their position, as the Group’s operational and financial turnaround is encouraging, and the balance sheet is healthier post-divestment. However, the absence of dividends and continued sector risks warrant close monitoring of subsequent quarters for sustained earnings momentum and improved capital returns.
• If you do not currently hold the stock:
  Potential investors may wish to adopt a “wait-and-see” approach until there is greater evidence of stable profitability, further order book growth, and/or a resumption of dividends. The business remains exposed to cyclical risk and competition, though recent improvements are promising.

Disclaimer: This analysis is based solely on information provided in the company’s latest financial disclosures. It does not constitute investment advice. All investments carry risk, and investors should conduct their own research or consult a licensed advisor before making investment decisions.

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