CDL's Q1 profit drops despite higher revenue

MAY 12, 2017

Wong Siew Ying

First-quarter earnings fell for City Developments (CDL) despite booking a higher revenue.

In announcing the results yesterday, the developer also noted that the residential property market here is "beginning to show some signs of recovery".

Net profit for the three months ended March 31 declined by 18.9 per cent to $85.5 million.

CDL said the drop was due to several factors, including the absence of contribution from Bartley Ridge and Echelon, two joint-venture residential projects which were completed last year, and the disappointing performance by subsidiary Millennium & Copthorne Hotels.

Its revenue, meanwhile, climbed 8.4 per cent year on year to $783.8 million. "The increase was attributable to improved performance from the property-development segment, which posted a 33.9 per cent increase in contribution," the firm said, adding that the growth was mainly led by home sales at a Suzhou project and Gramercy Park here.

The Suzhou Hong Leong City Centre, a mixed-use waterfront development, continued to record strong residential sales, selling 77 per cent of 1,374 units launched in phase one and 43 per cent of 430 units in phase two.

Residential developments here, such as upmarket freehold condominium Gramercy Park, as well as joint-venture projects - Forest Woods, Coco Palms, The Venue Residences and Shoppes, and The Brownstone executive condominium - also sold well.

CDL executive chairman Kwek Leng Beng said the residential property market here is beginning to show signs of recovery.

He added: "Property prices appear to be stabilising, especially in the high-end market, and there is increased investor confidence as Singapore remains a relatively safe haven in a highly volatile marketplace."

Despite a challenging office sector, the occupancy rate for CDL's office portfolio stayed healthy at 95.3 per cent as at March 31.

It is exploring moves to refurbish its office property assets, such as Republic Plaza, amid the market lull.

Another asset being renovated is the 97-unit Le Grove Serviced Apartments, which was shut last December to be converted into a 173-unit development at a cost of $30 million. It is expected to be completed by the second quarter of next year.

CDL said it remains alert to deploying funds for acquisitions here and abroad and will seek new opportunities.

Chief executive Grant Kelley said: "In particular, we are taking advantage of the subdued sentiment and weaker currency in some of our key target markets such as the United Kingdom, which may offer an attractive entry point."

The firm has invested about $770 million so far this year, including in a Chinese co-working space operator and buying a development site in Tampines.

Quarterly earnings per share shrank to 9.4 cents, from 11.6 cents a year before. Net asset value per share was $10.23 as at March 31, up from $10.22 as at Dec 31.

The counter closed seven cents higher at $10.85 yesterday, before the earnings were announced.