Far East Orchard: 1Q22 swung to net profit despite Omicron surge

Singapore two-dollar bills

Far East Orchard reported Friday its first quarter swung to a net profit of S$2.6 million from a year-earlier net loss of S$700,000, partly as the Australian dollar strengthened against the Singapore dollar.

“The hospitality business was impacted at the start of the year due to the emergence of the Omicron variant and reintroduction of travel restrictions in several countries, but encouraging recovery was seen in March when borders reopened,” Far East Orchard said.

In addition, the company received S$1.8 million inconsideration for the disposal of the reversionary interest in the Village Residence Clarke Quay property, Far East Orchard said. The site is to be redeveloped into a large-scale mixed use project.

Revenue for the three months ended 31 March increased 7.6 percent on-year to S$29.7 million, Far East Orchard said in a filing to SGX.

Compared with the year-ago quarter, the performance of the hospitality business improved, and the purpose-built student accommodation (PBSA) business was resilient, the company said.

During the quarter, Far East Orchard’s Australian joint venture, TFE Hotels, opened three hotel properties — in Sydney, Dusseldorf and Stuttgart — adding 494 rooms, with two new hotel openings in Australia expected in the second half of 2022, the filing said.

Outlook

Far East Orchard issued a mixed outlook.

“As more countries reopen their borders, the group’s businesses will ride along with the recovery momentum,” the company said, citing increasing flight bookings since Singapore fully opened its borders at the beginning of April.

“The group’s Singapore hospitality business is expected to benefit from the reopening with stronger corporate and leisure demands observed. However, China, being one of Singapore’s key inbound source markets still has its borders closed, and this will have an overall impact on Singapore’s tourism recovery,” Far East Orchard said. It noted that the isolation and movement control order (MCO) businesses — related to stemming the spread of the Covid-19 virus — are expected to decline sharply.

Far East Orchard owns more than 10 hospitality assets and manages more than 100 properties with more than 18,000 rooms in Australia, Europe, Japan, Malaysia, New Zealand and Singapore. The company also has a U.K. PBSA portfolio of more than 3,500 beds.