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Massive Construction Demand Boosts KSH 1H FY2026 · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Welcome back to The Deep Dive. Today, we're going to get into something really
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  fascinating, the financial results for KSH Holdings Limited,
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  specifically looking at their first half for fiscal year 2026.
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  And our mission this time is, I think, particularly compelling.
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  We really need to understand the mechanics behind what looks like a massive financial turnaround.
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  I mean, KSH didn't just, you know, crawl out of the red. They completely flipped the script.
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  They absolutely did. So we're going to dissect what drove that reversal and
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  maybe more importantly, what their management is seeing for the future,
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  especially with the global economy getting a bit choppy.
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  That's exactly right. And for anyone who follows the construction and property
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  sector, this isn't just a review of numbers. It's really a case study in disciplined execution in a.
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  Well, a very volatile environment. The sheer size of this swing from a pretty
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  big loss last year to a healthy profit this year, that sends a very clear signal.
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  It says core execution is working and their financial footing is remarkably solid.
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  OK, so let's start with those headline figures because they really do tell the
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  initial story. Yeah, the top line. The top line. Total revenue for the half
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  year was up by almost 20 percent.
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  It rose from about $52.7 million to $63.1 million in this period.
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  And that revenue growth alone tells you that activity is up, work is getting done.
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  But the real story, the absolute game changer, is that bottom line. The net income.
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  Yeah, that's the one. The group reported a net profit attributable to owners
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  of, what was it, $5.3 million for the half.
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  Which is great on its own, but you have to put it in context.
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  You do. And the context is that it completely erases the S6.5 million dollar
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  loss they recorded in the same period just last year. That's an S11.8 million
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  dollar swing in 12 months. I mean, that is huge.
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  It's massive. And you see it right there in the earnings per share.
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  It goes from a loss of 1.17 cents to a profit of 0.92 cents per share.
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  A really powerful signal for investors.
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  And if we start digging into where this all came from, the source material is,
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  well, is very clear. It was the core construction business. That was the engine.
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  That segment alone saw its project revenue jump by over 22 percent.
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  From $50 million to S61.1 million dollars. So that shows they're not just winning
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  contracts, they're executing on them.
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  That's higher work progress across their sites.
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  Exactly. And you can feel the confidence coming from that performance. Look at the dividend.
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  Ah, yeah. They proposed an interim cash dividend.
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  0.50 Singapore cents per share. Think about that.
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  Coming off a year with a major loss to immediately issue a dividend,
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  that's a very strong signal.
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  It's management saying they believe this profitability is sustainable.
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  They're communicating stability.
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  Okay, so let's unpack this for the listener. Flipping in a $6.5 million loss
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  into a $5.3 million profit.
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  That doesn't happen by accident. No, not at all. So what specifically allowed
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  them to pull off that reversal so, so successfully?
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  It was definitely a multifaceted approach, but it was all centered on internal discipline.
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  We can really point to three major positive factors here.
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  First, and I think this is the most impressive part given the industry backdrop,
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  was the improvement in their construction margins.
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  Right, because costs are up everywhere. Costs are way up.
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  And there's where, too. they rose from $45.2 million to S-47.7 million dollars.
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  But, and this is the key, their revenue went up even faster.
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  So the segment actually recorded an improved profit margin.
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  That implies some really tight cost control on their active projects.
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  Exceptionally tight. And the source material points to higher work progress
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  being the core driver, which means they're just running their sites very, very efficiently.
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  That's interesting. I wonder, though, should we be worried that this is maybe a one-off?
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  You know, from some older, more profitable contracts finishing up rather than
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  a systemic improvement?
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  It's a fair question. But the fact that it's tied to higher progress across
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  multiple ongoing projects suggests it's more about operational efficiency.
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  They're just getting things done faster and closer to budget.
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  Okay, so that's one driver. What's number two? A second one was financial.
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  Purely financial, they slash their finance costs. How much are we talking? A S $1.1 million drop.
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  That's a 42.3% decrease. Wow. And that came from two things.
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  Just having less debt overall and also getting a better rate or reduced cost of borrowings.
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  Very smart debt management. And that's pure profit, right? It goes straight
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  to the bottom line without pouring any more concrete. Exactly.
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  Which also speaks to the third point.
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  General efficiency. Other operating expenses went down by about $7.7 million.
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  Where did that come from? The sources say it was mainly lower building maintenance
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  and utilities costs, specifically for their properties in the PRC.
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  I mean, these aren't huge numbers on their own, but you add them to the finance savings.
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  It's a big win for internal controls. So a strong story of operational execution
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  and financial discipline, but it wasn't all smooth sailing.
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  The sources also highlight where the headwinds were. That's right.
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  There were two major areas of pressure they had to fight against.
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  The first one was currency, right?
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  The rental income from their investment properties actually decreased?
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  It did, by a pretty sharp 24.3%. But this wasn't a failure of their property
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  management. It was almost entirely due to the unfavorable foreign exchange rate
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  on the rental income from their properties in China.
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  A classic FX drag. Okay, and what was the second headwind? Now,
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  this is where it gets really interesting from an accounting perspective.
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  It's something that can confuse investors.
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  The results from their associates and joint ventures are.
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  They actually recorded a loss. A loss. S1.8 million dollars.
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  That's the one. S1.8 million dollars. Well, wait a second.
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  These are major popular projects we're talking about. The Arcadia at Boon King won Sophia.
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  How can successful developments like that be showing a loss on the books? That seems wrong.
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  It is entirely an accounting timing phenomenon. And it's really important we
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  explain this so you understand why it's not a red flag.
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  Think of it like this. When you start a huge property development,
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  you have all these costs up front.
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  Planning, marketing, legal fees, all of that. Right. You spend a lot of money
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  before you sell a single unit. Exactly.
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  And under the accounting rules, a lot of those costs have to be recognized in full immediately.
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  But the revenue, the revenue from selling the units is only recognized gradually
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  based on the percentage of completion of the entire project.
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  Ah, OK. So the costs hit the books hard and fast, but the revenue trickles in
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  slowly over time. You've got it.
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  So in the early stages, you get this temporary accounting loss.
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  It doesn't reflect the final profitability of the project at all.
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  So that S1.8 million dollar loss is basically just a temporary headwind from
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  the accounting rules, not a sign that the underlying assets are in trouble. Precisely.
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  And the reason they can just absorb those costs without breaking a sweat is
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  their financial resilience.
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  Which brings us to the balance sheet. And the balance sheet looks exceptionally
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  healthy. There are fixed deposits, cash, and bank balances.
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  It all totals over a $714.5 million.
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  That is some serious liquidity. And that liquidity is backed up by their debt
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  management, which we already touched on. I saw their gearing ratio improved. It did.
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  For anyone listening, the gearing ratio is basically how much debt a company
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  has compared to its equity.
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  Lower is better, less risky. And theirs went down.
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  Down to 0.20x from 0.22x. And that's tied directly to them paying down their debt.
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  Total loans and borrowings decreased by S4.8 million dollars.
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  It shows real financial caution in an uncertain time. And the strong foundation
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  is so critical because it's what anchors their future growth.
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  Let's talk about their revenue pipeline. The order book. The construction order
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  book is now more than half a billion dollars.
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  S500 million dollars. That $500 million figure is the foundation for their sustained profitability.
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  It's not just a big number. It's secured revenue that's expected to contribute
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  to performance all the way through fiscal year 2029.
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  That kind of multi-year visibility is a huge advantage in the construction world. A massive advantage.
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  And you see that same visibility on the property development side, too.
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  Their share of unrecognized revenue from units that are already sold is about,
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  183 million dollars. And most of that is from Singapore, right?
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  Yeah, S-168 million dollars from their Singapore JVs.
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  It proved those projects we mentioned are selling well, and will turn into real
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  profit as they get built. Okay, so let's shift to the outlook.
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  We have to connect this internal stability to the, well,
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  the broader economic climate. And the sources are clear that the operating environment is slowing down.
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  Globally, growth is moderating. Here in Singapore, GDP growth slowed to 2.9% in Q3 2025.
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  That's down from 4.5%. And the MAS core inflation forecast is pretty low for 2026. Very low.
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  Between 0.5 and 1.5%. So this isn't a crisis, but it's definitely not peak growth.
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  And we see that slowdown hitting their home turf construction.
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  Singapore's construction sector growth dropped to 3.1% in Q3.
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  That's half of what it was the quarter before. And here's the worrying part.
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  On a quarter-on-quarter seasonally adjusted basis, the sector actually, it contracted.
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  It shrank by 1.2%. It did. And that's a warning sign for the industry as a whole.
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  But KSH seems a bit insulated from that.
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  They do, to an extent. Their strong track record, especially in specialized
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  areas like lab and research facilities, helps.
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  Those are higher-value projects, not the most commoditized work.
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  So they can potentially hold on to better margins.
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  What about the property development market? Prices seem resilient.
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  They are. Private residential prices rose almost a percent in Q3.
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  But there's this looming threat of increased competition, and it's coming from
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  the government. The government land sales program.
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  The GLS. That's the one. The government is just flooding the market with supply.
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  Close to 10,000 units in 2025, which is 50% higher than the recent average.
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  So even if demand stays strong, that much new supply has to put pressure on
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  pricing down the line. It has to.
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  But the good news for KSH is that their key Singapore projects.
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  The Arcady, OneSophia, Sora, Bagnell House.
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  They've already hit satisfactory sales levels. So that S-168 million dollars
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  in future revenue is basically locked in.
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  And we should probably touch on
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  the PRC segment. The market there is still challenging. Very challenging.
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  But management confirms that sales are still happening in their Galbedian projects.
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  I mean, phase one of both projects is almost fully sold.
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  And one of the phase two projects has sold 88 percent of its completed units.
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  So even in a tough market, good assets can still move. That's right.
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  So when you put it all together, the management team is, as they say,
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  cautiously optimistic.
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  They've proven they can execute, but they're very mindful of the big challenges.
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  Elevated construction costs, foreign exchange swings, and just,
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  you know, the broader global economic picture.
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  So to wrap this deep dive up, the story of KSH in the first half of fiscal 26
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  is really one of operational discipline, a decisive profit reversal powered
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  by their core construction business.
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  And it's all underpinned by that massive liquidity in the half a billion dollar
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  order book that gives them that long term visibility.
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  The big takeaway here seems to be that combination of financial prudence,
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  cutting debt, lowering borrowing costs and sheer execution strength. That's it.
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  That combination gave them the breathing room they needed to navigate the industry
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  slowdown and those tricky temporary accounting issues from the property JVs.
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  So what does this all mean for you, the informed observer, considering that
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  management has done a great job on debt, but they're still citing elevated construction
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  costs and FX as their ongoing primary risks?
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  And knowing they have that massive S-500 million dollar construction order book
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  to work through until 2029, what stands out to you as the biggest immediate
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  risk to them sustaining these improved margins? Yeah.
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  Is it the difficult cost environment and the operational risk inside that active construction segment?
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  Or is it more about the slower revenue recognition and the ongoing challenges
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  in their international property business?
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  So it's a classic choice, isn't it? Internal execution risk versus external market risk.
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  Definitely something to consider as they continue to build on this really powerful
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  turnaround. Thanks for joining us for this deep dive.