Keppel Corp. reported on Thursday its first quarter net profit fell 40 percent on-year to S$203 million on lower gains from en-bloc sales of residential projects, missing a forecast from CGS-CIMB for S$230 million.
The property-to-infrastructure company said the drop in net profit was due to a year-earlier S$289 million gain fro the en-bloc sale of Keppel Cove in Zhongshan, China, compared with a S$174 million gain in the 2019’s first quarter from the divestment of 70 percent of Dong Nai Waterfront City, Vietnam, and from re-measuring its M1 stake’s value.
Revenue for the quarter ended 31 March rose 4 percent on-year to S$1.53 billion, on higher revenue from power and gas sales, infrastructure projects in Singapore and Hong Kong, the consolidation of Singapore telco M1, Keppel said in a filing to SGX after the market close on Thursday.
Those increases were offset by lower contributions from property trading in Singapore, the filing said.
The offshore and marine division posted a net profit of S$6 million for the quarter, swinging from a year-ago net loss of S$23 million, on its share of results from associated companies and lower taxes. That result slightly topped CGS-CIMB’s forecast for S$5 million net profit for the division.
Revenue for O&M was S$332 million, nearly flat on-year, it said.
The division’s net order book, excluding the Sete rigs, is at S$4.7 billion, Keppel said.
“The division will continue to focus on delivering its projects well, exploring new markets and opportunities, investing in R&D and building new capabilities,” Keppel said. “The division is also actively capturing opportunities in production assets, specialized vessels, gas solutions, floating infrastructure and offshore renewables, as well as exploring ways to re-purpose its technology in the offshore industry for other uses.”
The property division, the largest contributor to net profit, reported a net profit of S$132 million, down 65 percent on-year, on the year-ago en-bloc sales gains.
Loh Chin Hua, CEO of Keppel, noted in prepared remarks that the property division sold 390 homes in the quarter, up from 300 in the year-ago period, for a total sales value of S$230 million.
“Notwithstanding cooling measures in China, we continue to see strong demand for well-located projects in high growth cities,” Loh said in the statement.
“We have just launched our new Nanjing residential project last week, and all 271 units in Phase 1 were fully sold at launch. Due to the overwhelming demand, some 3,200 potential homebuyers had balloted for the units, which translates to more than 10 times oversubscription,” he said. “This year, we intend to push out some 2,000 units across China.”
Loh added that Keppel Land’s residential landbank was around 48,000 units, with around 17,000 launch-ready between now and 2021. Around S$2.4 billion in revenue is expected to be recognized from the second quarter through 2021 for homes already sold, he said.
The infrastructure division posted net profit of S$16 million, down 38 percent on-year, on lower contributions from energy infrastructure and logistics, and a share of losses from Keppel Infrastructure Trust, compared with a year-earlier share of gains, due to costs associated with the Ixom acquisition this year.