Perennial Q1 net profit falls 86.7% in absence of one-off gain

THE absence of a one-off gain from the partial divestment of TripleOne Somerset last year has resulted in an 86.7 per cent fall in first-quarter net profit to S$5.14 million for Perennial Real Estate Holdings.

Revenue in the three months ended March 31 was S$14.95 million, down 26.1 per cent in the absence of revenue from TripleOne Somerset, which Perennial now accounts for as an associate.

Excluding TripleOne Somerset's revenue contribution in 2017, Perennial's revenue was 10.1 per cent higher in the first quarter, mainly attributable to Perennial Qingyang Mall, Chengdu.

Revenue of around S$8.9 million came from the China retail and office portfolio, up 17.8 per cent from S$7.6 million in the same period a year earlier.

Revenue from Singapore assets such as Chijmes (51.6 per cent owned) was S$3.2 million, down 69.1 per cent from S$10.2 million a year earlier as TripleOne Somerset did not add to the topline.

The remaining 19.2 per cent of revenue came from Perennial's fee-based management income.

First quarter earnings before interest and tax (EBIT) was S$24.4 million, but would have been S$15.8 million higher than a year ago excluding the TripleOne Somerset divestment gain.

This was due to a higher share of results from Yanlord Perennial Investment Singapore (YPIS), Chinatown Point in Singapore and Shenyang in China. In February, YPIS acquired an additional 19.9 per cent stake in WBL and recognised a gain between the acquisition price and the fair value of the acquired net assets.

The higher contribution of Chinatown Point was attributable to Perennial's increased stake of 5.49 per cent acquired in November 2017. For Shenyang, there was a one-off adjustment from a lease restructuring in the first quarter last year.

On Tuesday, Perennial completed the acquisition of Chesham Properties' 50 per cent stake in Capitol Singapore at a cash consideration of S$129 million, so Perennial now owns 100 per cent of Capitol Singapore.

Perennial is now finalising the appointment of the operator for the hotel component from a shortlisted group of established and renowned five-star brands/operators, it said.

Perennial has a pro forma net debt to equity ratio of 0.7 times following the Capitol transaction. As at March 31, this ratio was 0.58 times.

In China, the Perennial International Health and Medical Hub in Chengdu is slated to officially open on June 1. Committed occupancy currently stands at 87.6 per cent.

Earnings per share was 0.31 Singapore cent, down from 2.32 Singapore cents in the same period last year.

Net asset value per share was S$1.692 as at March 31, up from S$1.663 as at Dec 31.

The counter rose 1.17 per cent to S$0.865 on Tuesday before the results were released after market close.