For QE31/12/2013, KSL's PBT plummeted by 95% q-o-q or 91% y-o-y to RM4.5 million while revenue dropped by 44% q-o-q or 3% y-o-y to RM122 million. KSL incurred a net loss of RM10.5 million as compared to a net profit of RM68 million in QE30/9/2013 or RM35 million previous year.
The company attributed the drop in its PBT for the current quarter to the following:
1. The loss arising from fair value adjustment of RM9.4 million on investment properties; and
2. Provision of deferred taxation for RPGT of approximately RM13 million.
That just doesn't adequately explain the severity of the drop in the bottom-line of the group. The questions that would beg for some answers are:
- Why the sharp drop in revenue? Is it due to slow start for newly projects? Is it due to poor sales?
- What are the other negative items that caused the drop in PBT by RM43.2 million y-o-y or RM87.5 million? The 2 items listed above amounted to only RM22.4 million.
Table: KSL's last 8 quarterly results
Chart 1: KSL's last 37 quarterly results
KSL (opened at RM2.18 today) is now trading at a PE of 4.8 times (based on last 4 quarters' EPS of 45 sen). We cannot be sure what will be KSL's EPS for the next financial year. I am sure it will be negative as the last quarter. Would KSL rebound back to chalk up an EPS of 45 sen like the last 4 quarters or would it be like the preceding 4 quarters' EPS of 33 sen?
KSLis in an uptrend. Its horizontal support levels are RM2.20 & RM2.00.
Chart 2: KSL's weekly chart as at Feb 26, 2014 (Source: Tradesignum)
Based on poor financial performance, KSL is now downgraded to a HOLD.
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, KSL.