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Far East Orchard sinks into S$853,000 net loss for first half

HOTEL operator and property developer Far East Orchard has fallen into the red with a S$853,000 net loss for the half year ended June 30, 2020, versus a net profit of S$5.8 million a year ago. (see amendment note)

Loss per share stood at 0.19 Singapore cent for the six months, down from the year-ago earnings per share of 1.33 cents.

Revenue for the half year decreased by 13.7 per cent to S$64.9 million, from S$75.3 million in the corresponding period last year.

The plunge in its hotels' occupancy level, due to the novel coronavirus pandemic, took a toll on the group's hospitality business. 

This was partially offset by the demand for accommodation facilities for isolation purposes in Singapore and Australia, as well as demand from companies to house their foreign workers in Singapore, Far East Orchard said.

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The drop in turnover was also partially offset by higher sales from the group's student accommodation properties in the UK, given the full half-year contribution from the five purpose-built student accommodation (PBSA) assets acquired in 2019.

Far East Orchard on Thursday said that occupancy booking at its PBSA assets is behind the level recorded this time last year, but the group expects the rate of booking to increase towards the start of the 2020/2021 academic year as students finalise decisions on their universities and accommodation.

It noted that the Covid-19 pandemic has led to "short-term concerns" surrounding international student numbers and differing approaches such as online classes or a mix of online and face-to-face teaching. 

"While there remains higher risk around international student numbers, these short-term concerns will be allayed as the academic year stabilises with safe-distancing measures and no major resurgence of Covid-19," it said.

As for the property development business, Far East Orchard expects a slowdown in sales and leasing activities at its joint-venture development project Woods Square in Singapore amid uncertainty during the pandemic.

No dividend was recommended for the half year, the same as a year ago.

Far East Orchard's shares were down S$0.01 or 1 per cent to S$0.96 as at 9.38am on Friday. The company is a subsidiary of private property developer Far East Organization.

Amendment note: An earlier version of this article misstated the amount of Far East Orchard's net loss. It has been revised to reflect the correct amount. We apologise for the error.

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