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First Sponsor's Q2 profit up 12.9%
SINGAPORE property developer First Sponsor Group, which owns commercial properties in China and the Netherlands, on Wednesday posted a 12.9 per cent boost in its net profit for the second quarter on higher revenue.
Net profit for the three months ended June 30, 2016, stood at S$8.61 million, up from S$7.62 million in the year-ago period, said the company, which also doles out property financing in China.
Revenue rose 40.8 per cent to S$42.2 million, boosted by the sale of properties and rental income from investment properties, partially offset by a decrease in revenue from property financing.
First Sponsor noted that the recovery in China's housing market that helped underpin the economy in the first half of 2016 is showing signs of tapering off. But it said demand for the Dongguan residential market - where it operates - continues to grow, with the further decrease of inventory turnover from four months in January to three months in April.
It also updated on two "problematic" loans amounting to 640 million yuan (S$130 million). For the first loan totalling 170 million yuan, the court had issued a judgment on May 6, 2016, in favour of the group, whereby the loan principal and interest are due with penalty interest fixed at 24 per cent per annum from the date of default.
The ruling will become effective around early August 2016 if the borrower does not file an appeal by then. First Sponsor can apply for court enforcement to foreclose and auction the debt collateral if the principal and penalty interest are not duly repaid on time.
For the second loan of 470 million yuan, which comprises eight related loans disbursed to six different borrowing entities, the court has ruled over five loans, saying that the respective loan principals and interest are due with penalty interest fixed at 24 per cent per annum from the date of default.
Borrowers of four out of the five loans have lodged or intend to file appeals to the court to seek a lower penalty interest rate of 17 per cent.
The court hearing dates for the remaining three loans have been set in August and October 2016.