This article was originally published on Thursday, 8 August 2019 at 8:13 A.M. SGT; it has since been updated to include more details.
City Developments posted Thursday its second quarter net profit fell 26.4 percent on-year to S$162.40 million, mainly on the timing of profit recognition for property development.
“This segment tends to be lumpy since profits from some projects cannot be recognized progressively but only upon completion,” the property developer said.
Revenue for the quarter ended 30 June dropped 37.5 percent on-year to S$850.4 million, City Developments said.
In Singapore, the company said it sold 505 units, including executive condominiums, which are a hybrid public-private housing option, with total sales of S$1.55 billion in the first half. That compared with sales of 651 units with a sales value of S$1.29 billion in the year-ago period, it said.
In China, the wholly owned subsidiary CDL China and its joint venture associates sold 347 residential units in the first half, for a total sales value of 1.08 billion yuan, or around S$213 million, the filing said.
“By creating strong value propositions and timing our launches strategically, we have achieved healthy sales for our residential projects in Singapore. At the same time, we have further diversified overseas through transformational initiatives such as our partnership with Sincere to expand CDL’s presence in China and achieve sustainable growth there,” Sherman Kwek, CEO of City Developments, said in the statement.
“Increasing recurring income via acquisitions, asset enhancement initiatives and our fund management strategy is another priority,” the CEO added.
Finance income more than doubled to S$40.55 million in the second quarter from S$18.63 million in the year-ago period, mainly on increased interest income from loans given to Sincere Property Group, in which City Developments plans to take an around 24 percent stake, the filing said.
Administrative expenses increased 13.6 percent on-year to S$143.32 million on depreciation due to changes in accounting for leases and depreciation of investment properties recently added to the developer’s portfolio, the filing said.
Property development revenue dropped 65 percent on-year to S$286.51 million for the quarter, while profit before tax shrank by 63 percent on-year to S$100.28 million, the filing said.
Hotel operations revenue for the quarter increased by 1.04 percent to S$425.09 million, while profit before tax declined 11.74 percent on-year to S$31.45 million, the filing said.
“The performance of M&C was impacted by a myriad of factors, including ongoing refurbishment works for Millennium Hotel London Mayfair (this hotel was in full closure since July 2018) in London and Orchard Hotel in Singapore, closure of Dhevanafushi Maldives Luxury Resort in Maldives for rebranding, lackluster performance across Asia hotels, and continued loss-making of U.S. hotels,” City Developments said.
Investment properties posted revenue of S$104.26 million, up 23.32 percent on-year, while profit before tax nearly tripled to S$77.78 million.
For the first half, City Developments reported net profit increased 18.3 percent on-year to S$362 million on revenue of S$1.60 billion, down 34 percent.
City Developments declared a special interim dividend of 6 Singapore cents a share, unchanged on-year.
In its outlook, City Developments was cautious.
“U.S.-China trade tensions continue to severely dampen market sentiments globally. Until a deal is struck between the world’s two largest
economies, global markets will continue to succumb to trade jitters. Many economies, including Singapore, will be seriously affected by the escalating dispute,” Kwek Leng Beng, executive chairman of City Developments, said in the statement.
“Agility, discipline and experience are critical attributes that will enable the group to navigate through these persistent headwinds in
today’s dynamic, disruptive and unpredictable landscape,” the executive chairman added.
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