First Sponsor's Q1 profit up 39% to S$23.8m

Singapore

MAINBOARD-LISTED First Sponsor Group's first quarter net profit rose 39 per cent to S$23.8 million, thanks to a "strong showing" of its property financing business segment, the Singapore-based property developer with development projects in China and the Netherlands said in a regulatory filing on Thursday. (See amendment note)

Earnings per share climbed to 3.43 Singapore cents, up from 2.64 cents in the previous corresponding period.

Revenue for the three months ended March 31 fell 5.2 per cent to S$45.3 million, on the back of a drop in revenue from the sale of properties and rental income from investment properties, somewhat offset by revenue increases in property financing and hotel operations.

Revenue from the sale of properties fell 37 per cent to S$8.8 million, due mainly to the recognition of revenue from fewer units in the company's Millennium Waterfront project.

Rental income from investment properties dropped 15 per cent to S$3 million, mainly due to an absence of a one-off service income of S$400,000 charged for Q1 2018 by the group to its 50 per cent-held joint venture that owns the lease to Le Meridien Frankfurt Hotel.

Hotel operations revenue rose 8.9 per cent to S$10 million, bolstered by full-quarter contributions from the company's Hilton Rotterdam Hotel, which the group had been leasing only since February 2018.

This was partially offset by the absence of contribution from M Hotel Chengdu, which ceased operations in July 2018, the group said.

Property financing revenue increased 11.6 per cent to S$23.5 million.

This stemmed from a 2.8 billion yuan (S$567.6 million) China property financing loan book as at the end of fiscal 2018, and a higher average secured China loan portfolio for the current quarter which saw a S$9.6 million increase in interest income.

This was partially offset by the absence of net penalty interest income from successful enforcement action on defaulted China loans.

The group is targeting to acquire a 100 per cent equity interest in a 76,570 square metre mixed use development site in Chang'an, Dongguan.

It intends to look for a third party as one of the buyers, subject to the group retaining a controlling stake.

This comes as China's government unveiled the development timeline of the Guangdong-Hong Kong-Macau Greater Bay Area in February 2019, which also covers Dongguan as it falls in the Pearl River Delta area.

"If the acquisition is successful, the group will work towards the pre-sale launch of Phase 1 as soon as possible," said Neo Teck Pheng, group chief executive officer.

First Sponsor is undertaking a rights and bonus issue to raise up to S$399.3 million. It intends to redeem all outstanding Series-1 perpetual convertible capital securities once the fund raiser is completed.

Shares in First Sponsor closed at S$1.27, down one cent on Thursday. The results were announced after market close.

Amendment note: An earlier version of this article incorrectly stated that First Sponsor is a China-based property developer when in fact it is a Singapore-based property developer with development projects in China and the Netherlands. The article has been revised to reflect this.