Fair-value losses drag Ho Bee Land’s H2 earnings down 93% to S$16 million

PROPERTY developer Ho Bee Land saw its earnings for the second half of 2022 fall 93 per cent to S$16 million compared to S$225 million in H2 2021. 

On a per-share basis, earnings for the period under review came in at S$0.0241, down from S$0.3388 for the same period in 2021. 

The board of directors has recommended a first and final cash dividend of S$0.08 per share, down from S$0.10 per share in 2021. Subject to shareholders’ approval at the upcoming annual general meeting on Apr 26, the dividend will be paid out on May 25. 

Revenue for H2 was up 35 per cent to S$257.4 million from S$190.4 million. Sale of development properties rose 57 per cent to S$126.3 million from S$80.6 million as more land lots were handed over to buyers in Australia. This was, however, partially offset by lower sales in Turquoise in Sentosa Cove, the company said in a filing on Monday (Feb 27). 

Rental income increased 19 per cent year on year to S$131 million, due chiefly to rental contributions from The Scalpel in London, which was acquired in March 2022. 

Net fair-value loss on investment properties came in at S$114.7 million compared to a net fair-value gain of S$56.8 million in H2 2021. Ho Bee recorded S$161.5 million fair-value loss on its London portfolio, which was partially mitigated by a net fair-value gain of S$46.8 million on its Singapore portfolio. 

Net finance costs for H2 rose to S$54.8 million from S$20.4 million mainly due to additional bank borrowings to fund the acquisition of The Scalpel and the development projects in Australia, coupled with rising interest rates. 

Cost of sales for residential development projects increased 27 per cent year on year to S$86.6 million in H2, due to higher sales. Direct rental expenses climbed 24 per cent to S$11.1 million due to higher operating expenses in Singapore. 

Profit for the full year fell 50 per cent to S$165.9 million from S$330.5 million. Revenue was up 42 per cent at S$175.9 million. 

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Ho Bee chief executive Nicholas Chua said the group’s Sentosa Cove projects achieved close to S$400 million in sales during the year. 

“With more than 4,700 land lots in our land bank, we have a good development pipeline for the next few years,” he said. 

He added that construction on the group’s new biomedical facility, Elementum, is ongoing. More than 70 per cent of the development is already pre-committed to key tenants ahead of its expected completion in Q4 this year. 

“This project is expected to contribute strongly to the group’s revenue in FY2024,” said Chua. 

The group said the continuing high interest rate environment will adversely affect its financial performance for the year. 

Nevertheless, Ho Bee said it is in “a good position to weather the headwinds” with a good pipeline of development properties in Australia and a resilient investment income base in Singapore and London. 

Shares of Ho Bee Land closed at S$2.38 on Monday, down 0.4 per cent or S$0.01.