Covid-19 pushes Frasers Property into S$45m H2 loss, full-year gain down 66%

Singapore

LOCKDOWNS, travel restrictions and hotel closures - Frasers Property felt the full force of the Covid-19 pandemic, reporting a S$45.7 million loss for its second half, compared to hefty net earnings of S$294.3 million a year ago.

Consequently, for the full year ended Sept 30, profit was down two-thirds to S$188 million on 5 per cent lower revenue of S$3.6 billion. Revenue for the second half fell 18 per cent to S$1.5 billion.

Frasers said on Wednesday that the weaker performance was mitigated by revenue from AsiaRetail Fund and Golden Land Property, whose results have been consolidated into the group's since July and August 2019 respectively. Frasers has since sold its 63.1 per cent stake in AsiaRetail Fund to Frasers Centrepoint Trust. The deal was completed last month.

While second-half loss per share was 2.56 cents, full-year earnings per share was 3.77 cents, down from 15 cents a year ago. Frasers has proposed a final dividend of 1.5 cents. There was no interim dividend. In FY 2019, total dividend was six cents per share, made up of an interim 2.4 cents and a final 3.6 cents.

Rachel Tan, DBS Group Research analyst, said Frasers' results were within expectations given that most developers are posting similar performance.

Frasers said the Covid-19 outbreak brought about worldwide hotel closures, government-imposed movement restrictions and temporary cessations of non-essential services, which adversely affected the group's hospitality and retail properties.

In addition, the group was hit by support packages extended to the group's tenants.

Fair value losses recorded on certain investment properties resulted in a 70 per cent drop in net fair value year on year.

Exceptional items or impairment loss rose to S$160 million, mainly from hospitality's S$129 million, with Singapore accounting for S$29 million. In FY2019, exceptional items was S$114.8 million.

Bright spots came from higher contributions from its industrial business and development income from China and the United Kingdom.

Koh Teck Chuan, CEO of Frasers Hospitality, said the group does not provide details of the impairment loss when asked how much is due to lower selling prices for its posh 455-unit The Riviere project.

To date, 74 units have been sold. In a soft re-launch in October, it managed to move 14 units at about S$2,500 per square foot (psf), he said. Located in the Robertson Quay area, The Riviere was launched in May 2019 at a median price of S$2,932 psf.

Mr Koh said the latest sales show that units can sell "at right pricing". The CCR or core central region market is "more sensitive to pricing" and the group will be "more cognisant" to the competition in other projects around it, he said.

Frasers' total property assets have grown to S$33 billion, up from S$19.4 billion in 2015. By geography, Singapore is the largest with 39 per cent followed by Australia at 23 per cent. By asset class, industrials/logistics has the largest share at 23 per cent followed by business parks/offices at 21 per cent. Hospitality assets make up 15 per cent.

Drilling further into its results by segment, Frasers said revenue and profit before interest and tax (PBIT) for Singapore decreased by 11 per cent and 33 per cent to S$609 million and S$313 million, respectively.

Revenue from the Singapore retail investment properties portfolio increased by S$82 million to $437 million, whilst PBIT decreased by S$80 million to S$270 million.

Revenue and PBIT from the Singapore commercial properties portfolio fell by S$88 million and S$57 million to $123 million and $88 million, respectively, mainly due to the absence of 5.5 months' results from FCOT (Frasers Commercial Trust), as a result of the merger of FCOT into the enlarged FLCT (Frasers Logistics & Commercial Trust) since April 2020 and lower contributions from Frasers Tower following the dilution of 50 per cent interest in June 2019.

Revenue and PBIT from the Singapore residential properties decreased by S$72 million and S$18 million to S$49 million and a loss of S$38 million, respectively. Revenue and PBIT were affected by a write-down to net realisable value and lower contributions from its residential projects.

Australia's revenue and PBIT decreased by S$501 million and S$41 million to S$619 million and S$38 million.

Industrial revenue and PBIT increased by S$32 million and S$104 million to S$500 million and S$351 million, respectively.

Frasers closed one cent higher to end at S$1.15 on Wednesday.