Tee Land: Swings to fiscal 1Q loss amid QC charges and Teck Guan Ville option fee

Singapore two-dollar bills

Tee Land said on Friday that it swung to a S$2.83 million loss attributable to owners in its fiscal first quarter, from a year earlier income of S$138,000, despite a rise in revenue amid higher qualifying certificate (QC) charges.

Revenue for the fiscal first quarter ended 31 August was S$34.19 million, up 31.7 percent on-year, it said in a filing to SGX after the market close on Friday.

The revenue increase was mainly on higher contributions from development projects, particularly The Peak @ Cairnhill I, where the sale of nine units on a deferred payment scheme were completed during the quarter, it said, adding other projects also seeing higher contributions included 24One Residences and Rezi 35.

Cost of sales rose 43.5 percent on-year in the quarter to S$31.18 million, while the gross margin fell to 8.8 percent from 16.3 percent in the year-earlier period, Tee Land said.

The gross profit marine drop was attributed to the sale of nine units at The Peak @ Cairnhill I at a written down value with no gross profit recognized, it said, noting that if that were excluded, the quarter’s gross profit margin would have been 18.2 percent.

Administrative expenses rose 17.7 percent on-year in the quarter to S$2.15 million, partly driven by higher QC charges for the second year related to the Peak @ Cairnhill I project and higher bank charges, Tee Land said. It added that the QC charge is expected to be lower in the current fiscal year as most of the project’s units have sold.

Selling and distribution costs fell 36.4 percent on-year in the quarter to S$1.27 million, mainly on the absence of one-off promotional expenses of S$800,000 for the Hilbre 28 project in the year-earlier quarter, it said.

Other operating expenses rose by S$800,000 due mainly to the option fee of S$400,000 forfeited for the aborted purchase of land at Teck Guan Ville, a realized S$200,000 foreign exchange loss on Thai baht proceeds from the disposal of Chewathai PCL and an unrealized exchange loss of S$300,000 as the Malaysian ringgit and New Zealand dollar weakened against the Singapore dollar, Tee Land said.

Tee Land’s share of results of associates was a loss of S$447,000 in the first quarter, swinging from a year-earlier gain of S$634,000, the filing said, attributing the loss to the Rezi 32 project and Chewathai.

In its outlook, Tee Land pointed to “challenging” Singapore property market conditions after the government introduced a fresh round of cooling measures in July.

“Whilst the group prepares its new development property sites to be launched in fiscal-year 2019, it will continue to assess the market situation and take appropriate steps to refine its sales strategy where necessary,” Tee Land said.

“Going forward, the group remains cautious when seeking opportunities to acquire new land sites and continue to actively realize value in its investments,” it added.

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