http://www.businesstimes.com.sg/arch...ives-377-1377m

Published August 15, 2012

CityDev Q2 net dives 37.7% to $137.7m

Group to launch two projects with total of 1,420 units

By Mindy Tan


CITY Developments' net profits for the second quarter and the first half of this year took a hit in the absence of substantial divestment gains that it enjoyed in the corresponding periods last year.

The financial results released yesterday were accompanied by news that CityDev intends to roll out two project launches - the 508-unit condominium at Alexandra Road and a 912-unit condominium at Pasir Ris Grove - over the rest of the year.

For the three months ended June 30, CityDev's net profit attributable to shareholders plunged 37.7 per cent year on year to $137.7 million while revenue fell 19.6 per cent to $787.8 million.

For the first half of the year, the group reported a 41.5 per cent drop in net profit to $294.5 million and a 6.8 per cent dip in revenue to $1.63 billion.

The second quarter and first half saw "other operating income" plummet to $4.3 million from $93.86 million and to $50.2 million from $243.6 million respectively. This was due to the inclusion of substantial divestment gains in the 2011 comparative periods.

CityDev said: "Excluding substantial divestment gains from 2011 results arising from Studio M Hotel and The Corporate Building in Q2 2011 and The Corporate Office in Q1 2011, Patmi (profit after tax and minority interests) of $294.5 million for 1H 2012 was on par with 1H 2011."

The property and hotel group yesterday also announced that its 240-room hotel, W Singapore Sentosa Cove, will be opening next month, with Quayside Isle's retail units expected to open before year-end.

That the group is relatively bullish about the residential market could be attributed to it seeing a substantial increase in residential sales value for the first half of 2012. Together with its joint venture associates, CDL sold a total of 1,299 units during the six months, compared with 809 units a year ago. The sales value increased some 57 per cent to $1.25 billion.

Though strong sales were achieved for its residential launches, the locked-in profits could not be booked as the construction of these projects has yet to reach the recognition stage.

In June, the group successfully tendered for a land parcel at Buangkok Drive/Sengkang Central. It plans to develop a 640-unit luxurious condominium on the site, which is beside Buangkok MRT Station.

Said CityDev's executive chairman Kwek Leng Beng: "The government is paying a lot of attention to the low-end and offering many sites. I think by the time they are completed, there will be a slight oversupply."

He added: "(But) we are not so afraid of oversupply because time will take care of oversupply."

Overseas, wholly-owned subsidiary, CDL China Ltd, is looking to launch its first residential development at Eling Hill in Yuzhong District, Chongqing, next year.

Separately, hotel operations from the group's subsidiary, Millennium & Copthorne Hotels plc (M&C), was the second highest contributor in pre-tax profits.

M&C registered net profit of £58.4 million (S$117 million) in the first half of 2012. Revenue per available room rose 4.6 per cent.

CityDev's Q2 earnings per share dropped to 14.4 cents, from 23.6 cents a year earlier. The group's balance sheet remained strong, with $2.3 billion of cash and cash equivalents.

"The outlook for the global economy is uncertain and fragile at this stage. Economic conditions have deteriorated further compared to six months ago," Mr Kwek said, adding that it may take at least three years to recover from the crisis.

CityDev shares shed 15 cents, or 1.25 per cent, to close at $11.83 yesterday.