Property developer GSH's Q3 profit dragged down by fair-value loss

MAINBOARD-LISTED property developer GSH Corporation on Friday posted a 98.4 per cent plunge in its third-quarter net profit to S$103,000, from S$6.5 million in the year-ago period, due to a fair-value loss on financial derivatives.

The group said in a filing to the local bourse that it had entered into a loan and deposit arrangement with a bank, which has foreign-exchange exposure.

"This exposure was fully hedged with a financial derivative. Consequently, the group recorded an unrealised exchange gain of S$1 million from the loan and deposit arrangement and an unrealised fair value loss on financial derivative of S$2 million in Q3 2016."

Revenue for the three months ended Sept 30, 2016, grew 19 per cent year on year to S$28.4 million, lifted by the hospitality business, which in turn was due mainly to the increase in room occupancy rates at its resorts in Sabah, Malaysia.

Cost of sales went up 11.1 per cent to S$13.5 million.

Operating profit grew 45.9 per cent to S$8.9 million.

The group said the outlook for the hospitality industry remains positive, while it is weaker in the property industry. "Generally, the Singapore commercial property market is expected to remain muted against a background of declining rents and higher vacancies."