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ETC posts Q3 profit of S$1.4m alongside acquisitions, discloses S$24m in unauthorised withdrawals

EMERGING Towns & Cities Singapore (ETC) posted a more-than-doubling of profit in its third quarter, announced US$44.4 million of acquisitions and revealed 118 million yuan (S$24.2 million) of unauthorised withdrawals in a flurry of announcements before the market opened on Wednesday.

ETC, the Myanmar and China property developer formerly known as China Titanium and Cedar Strategic Holdings, reported that net profit rose to S$1.4 million, or 0.14 Singapore cent per share, from a year-ago S$523,000 in the three months ended Sept 30 following the sales of residential units.

For the nine-month period, however, net loss stood at S$342,000, wider than the comparable S$89,000 loss from a year earlier.

Third-quarter revenue doubled to S$19.6 million as ETC recorded S$12.7 million of sales from the Golden City project in Yangon, Myanmar and S$5.9 million of sales from the Daya Bay holiday apartment project in Huizhou, China. The company also received S$974,000 in rental income during the quarter.

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ETC said that it has sold 942 units representing 630.5 million yuan of gross development value at Daya Bay, of which 579 units, or about 357.1 million yuan, have been recognised as revenue. The remaining 363 sold units will be recognised over the last quarter of 2017 and in 2018.

For Golden City, the company has sold 494 units, representing US$175.7 million of gross development value, of which 257 units have been recognised as revenue. Revenue for the remaining 237 sold units will be recognised in the final quarter of 2017 and in 2018.

ETC said it will raise its stake in Golden City by up to a 20 per cent stake, to as much as 69 per cent. The consideration of up to US$20 million will be paid by a combination of new ETC shares at 9 Singapore cents apiece and notes.

The consideration price for the new shares represents a 13.9 per cent premium over ETC's last traded price of 7.9 Singapore cents on Monday. Trading in the stock was halted on Tuesday for the announcements.

ETC has also entered into an agreement with Myanmar-based Thu Kha Yadanar, a vehicle of Myanmar businessman Tin Tun Oo and his family, to buy a 61 per cent stake in the Thu Kha Yadanar Residence project in Yangon.

The residential project comprises 652 apartment units and a club house with gross floor area of about 85,190 square metres sitting on a 20,153-sq-m site.

The acquisition consideration is set at US$24.4 million, to be paid in a combination of notes and new ETC shares at 9 Singapore cents apiece.

ETC also revealed that 118 million yuan had been transferred without authoritsation between July and October 2017 from its 60 per cent-owned subsidiary Huizhou Daya Bay Mei Tai Cheng Property Development Co to two companies controlled by ETC controlling shareholder Luo Shandong.

The company said that it has tried but been unable to get Huizhou Daya Bay's staff to cooperate, even though Huizhou Daya Bay's legal representative is ETC's non-executive group chairman Christopher Chong. ETC is taking steps to file a shareholder's derivative suit in China in respect of the unauthorised withdrawals.

ETC said it does not expect the matter to materially affect its numbers, because the companies that received the withdrawals are owed around 88 million yuan by Huizhou Daya Bay as part of exiting loan agreements. Huizhou Daya Bay also owes a further 24 million yuan to other companies controlled by Mr Luo. Moreover, ETC owes Mr Luo about US$23.9 million as part of a convertible loan agreement.

ETC said it is exploring the possibility of offsetting the unauthorised withdrawals against the amounts owed to Mr Luo and his companies.