GuocoLand's Q2 earnings nearly triple on boost from Martin Modern sales

Fri, Jan 17, 2020

SHARANYA PILLAI


PROPERTY developer GuocoLand saw its second-quarter net profit near triple to S$32.4 million from S$10.9 million as revenue more than doubled to S$299.6 million from S$142.9 million, thanks to higher progressive recognition of sales from Martin Modern.

Earnings per share for the three months ended Dec 31 swelled to 2.49 Singapore cents from 0.55 cent a year earlier. The earnings surge was aided by a 23 per cent fall in finance costs to S$26.3 million, due to higher capitalisation of costs compared to the prior year.

The rise in profit was partly offset by a 180 per cent rise in other expenses to S$13.3 million, due to higher fair value losses on derivative financial instruments.

GuocoLand's share of profits, net of tax, from associates and joint ventures (JVs) dropped 89 per cent to S$993,000, due to a lower share of profit from its Shanghai JV, and losses from a JV in Singapore. The JV incurred costs for a development project, which was only launched for sale on Jan 11.

Meanwhile, GuocoLand recorded a tax expense of S$6.9 million as opposed to a tax credit of S$6.4 million a year ago, arising from the reversal of an overprovision.

For H1 FY2020, GuocoLand saw earnings double to S$74.5 million from S$37 million, while revenue rose 84 per cent to S$572.1 million. The bottomline was partly offset by a 25 per cent rise in administrative expenses to S$47.4 million, in line with the higher sales activities.

GuocoLand partially financed new land acquisitions during Q2 by loans, raising its borrowings by 16 per cent to S$5.2 billion as of end-2019, compared to June 30. Its gearing was approximately 1.1 times as of end-2019, with cash holdings of S$690.4 million.

The company's inventories rose 32 per cent year-on-year to S$3.9 billion as at end-2019, due to the completion of its purchase of a residential site at Tan Quee Lan Street for a bid price of S$800.2 million.

Looking ahead, GuocoLand noted that overall private residential property prices increased marginally by 0.3 per cent in the fourth quarter of 2019, according to Urban Redevelopment Authority's latest flash estimates.

Meanwhile, according to official data from the National Bureau of Statistics of China, new home prices in Chongqing continue to be on the rise, increasing 8.4 per cent year-on-year in November 2019.

Shares of GuocoLand closed at S$1.92 on Thursday, up 0.5 per cent, before the results were announced.