Uni-Asia 2Q19 net profit jumps 52 percent on higher investment returns and hotel income

Singapore container portSingapore’s container port

Uni-Asia Group reported Wednesday its second quarter net profit jumped 52 percent on-year to US$2.96 million on higher investment returns and hotel income.

Total income for the quarter ended 30 June increased 23 percent on-year to US$35.76 million, the alternative-investment company said in a filing to SGX.

For the first half, Uni-Asia reported net profit rose 26 percent on-year to US$6.45 million on total income of US$67.97 million, up 24 percent on-year.

Uni-Asia declared a dividend of 2 Singapore cents a share, compared with no dividend in the year-ago period.

Charter income

Charter income for the first half fell 7 percent on-year to US$18.21 million, as the number of wholly or majority owned ships fell to 11 from 12 after a disposal in April 2018, the filing said.

“In addition, overall dry bulk market was weak in the first half of 2019 due to several factors including Brazilian dam disaster, weak grain
trade and Japan steel production, The weak dry bulk market in the first half of 2019 affected the older 28,000 dwt dry bulk carriers which charter are on spot rate,” Uni-Asia said. “The charter for the group’s sole wholly owned containership was also weaker in the first half of 2019 compared to the first half of 2018 due to uncertainties arising from trade war.”

In its outlook, Uni-Asia pointed to indications the bulk carrier market may show some improvement after the January Vale dam disaster and a cyclone in Australia.

“The impact of vessels taking time ‘out of service’ for scrubber retrofits and the return of some Brazilian iron ore volumes to the market are viewed as some of the key factors lending potential support,” Uni-Asia said. “The recent increase in Baltic Handysize Index reflects these sentiments and could be positive for some of the Group’s vessels which are on short term index-linked charter.”

Fee Income

Fee income for the first half increased 7 percent on-year to US$4.31 million, on an increase in assets under management in the property asset management subsidiary, Uni-Asia Capital (Japan), or UACJ, the filing said.

Brokerage commission increased on more deals being closed in the first half, and incentive fees earnings by UACJ from meeting targets in managing Japan property projects rose, the filing said.

Hotel Income

Hotel income in the first half increased 39 percent on-year to US$39 million as the number of rooms under operation increased to 2,515 by end-June from 2,357 in the year-ago period, Uni-Asia said, adding the hotel portfolio also performed better.

“In particular, Japan’s unprecedented 10-day holiday from 27 April 2019 to 6 May 2019 boosted hotel income,” the company said.

The average occupancy rates increased to 82.0 percent in the first half, up from 77.6 percent in the year-ago period, while the average daily room rate rose by 7.3 percent on-year, the filing said.

“Japan’s upcoming Rugby World Cup and Tokyo 2020 Olympics are some positive factors for Japan’s hospitality industry. The group will be opening one more hotel in December 2019 in Fukuoka and four more hotels in 2020,” Uni-Asia said. “The group is working to capitalise on Hotel Vista brand name and good service standards to deliver good returns from hotel operations.”

Investment returns

Investment returns in the first half rose 13 percent on-year to US$5.70 million, partly on the realized gain from ship and property investments of US$1.2 million, the filing said.

A fair valuation gain from the second and third Hong Kong commercial office property projects contributed US$4.2 million, it added.

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