United Engineers net profit falls 16% in Q3

UNITED Engineers (UE) has posted a net profit of S$7.7 million for the third quarter, down 16 per cent from the same period a year earlier.

Earnings per share was 1.2 Singapore cents, down from a restated 1.4 Singapore cents in the third quarter last year. 

Revenue in the three months ended Sept 30 fell 31 per cent to S$81.5 million, owing to lower takings from property development and the absence of contributions from the divested liquefied petroleum gas business.

Property development revenue fell 92 per cent to S$2.5 million, due to the absence of revenue contributions from property sales at Eight Riversuites in 2018 and lower revenue from the property sales at Chengdu Orchard Villas and Shenyang Orchard Summer Palace.

Operating loss before interest for the property development segment was S$2.1 million, reversing from an operating profit of $2.1 million in the third quarter last year. 

Property rental and hospitality revenue slipped 3 per cent to S$31.8 million, though operating profit before interest was flat at $16.3 million.

UE had cash and cash equivalents of S$275.8 million as at Sept 30, down from a restated S$359.3 million a year earlier. In the third quarter, UE incurred around S$51 million for the stamp duty and partial payment to acquire a land parcel at Dairy Farm Road. It also spent S$25 million on dividend payments and spent S$9 million to acquire additional shares in a subsidiary.  

In September, UE won a tender to develop a land parcel at Dairy Farm Road into a residential development with commercial uses on the first storey. UE said that it will "expedite" the launch of the project for sale. It bid S$368.8 million, or S$830 psf per gross floor area (GFA) for the site.

The group said in a results filing on Tuesday: "US-China trade tensions may weigh on the global economic growth prospects, and may impact on manufacturing services in China.

"The latest round of residential property cooling measures announced by the Singapore government in July 2018 as well as the revised URA guidelines in October 2018 to increase the average unit size of private non-landed homes outside central area may affect the overall demand of residential property market. However, the office rental market in Singapore may continue to see steady recovery.

"In China, property cooling measures have brought about a relative slowdown in activity in certain cities, but the demand for good quality housing remains and the property market may continue to see sustainable growth in the longer term."

In the nine months to Sept 30, UE's net profit fell 56 per cent to S$27.7 million, as revenue fell 19 per cent to S$282.9 million. 

Net asset value per share was S$3.09 as at Sept 30, unchanged from Dec 31 last year.

United Engineers shares fell 1.17 per cent or three Singapore cents to S$2.54 on Wednesday before results were announced after trading hours.