Frasers Property H1 profit up 52.2% to S$197.2 million on residential development contributions
HIGHER contributions from residential developments pulled up first-half earnings at Frasers Property , but the group will continue taking a prudent approach towards managing its residential pipeline.
On Thursday (May 11), Frasers Property posted a 52.2 per cent rise in attributable profit to S$197.2 million for its first half ended Mar 31, from S$129.6 million the year before.
Group revenue increased 15.6 per cent to S$1.9 billion for the six-month period, from S$1.7 billion a year earlier. Earnings per share (EPS) was S$0.0502 for the first half, up 51.7 per cent. No interim dividend was declared, unchanged from the previous year.
Frasers Property noted that its Singapore residential development business had benefited from increased sales of units and selling prices on a buoyant residential market.
All units in its 455-unit prime condominium Riviere have been sold as at Apr 30, 2023. Frasers has one other project on the market – Sky Eden@Bedok. The project is being built on the site of Bedok Point, which Frasers Property acquired from its real estate investment trust Frasers Centrepoint Trust for S$108 million in 2020. So far, 128 units have been sold, or 81 per cent of the project.
Since Frasers’ latest launch, however, the government has stepped up cooling measures to damp demand and rein in prices. Asked at the earnings briefing on May 11 for the company’s view on the market and if Frasers would replenish its land bank, chief executive officer of Frasers Property Singapore Soon Su Lin said: “Residential remains a key asset class not only in Singapore but also across the globe.
“Besides our strength in retail as well as mixed use developments, we will continue to evaluate good sites made available through Government Land Sales or en bloc opportunities, but of course we will remain prudent and disciplined in our approach.”
Frasers Property will continue to monitor its older properties, she said, and continue to optimise its current portfolio.
Soon said the long-term outlook for the residential sector remains positive. “The inventory of stock of unsold units remains very low. There are more home buyers in the market than investors, and the credit profile of buyers remains strong.”
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As at Mar 31, 2023, the group’s pre-sold revenue for its residential business amounted to S$2.9 billion.
DBS analyst Derek Tan noted that while overall results were good, Frasers’ residential business is a “small part of its pie”, and hoped to see the developer being more active in landbanking.
Meanwhile, global easing of Covid-19 restrictions contributed to improved results for the group’s hospitality segment across various geographies, with profit before interest and tax for the segment increasing by 128 per cent to S$64 million.
However, the improved earnings from operations were partially offset by a net fair value loss, compared with a net fair value gain recorded in the same period a year ago.
Looking ahead, group chief executive Panote Sirivadhanabhakdi noted that macro developments, especially higher inflation, interest rate hikes, volatile foreign currency movements and potential asset repricing, will continue to pose challenges for the real estate sector.
Responding to a question on how Frasers Property has consistently traded under book value and whether it would consider a dual listing in Thailand, Panote said the group’s portfolio consists of global assets but it is considering all options to unlock value.
He added: “We definitely have been given advice by our investors and our shareholders as well on how we can create better liquidity and how to improve the pricing of our shares. My view is that at our management level, we continue to drive the bottom line and serve our shareholders.”
Net debt to total equity was 72.7 per cent for Frasers Property in H1 but this is “within the group’s comfort level” in view of its property assets mix, it said.
Asked about plans to reduce debt, group chief financial officer Loo Choo Leong said: “We are constantly looking at ways we can de-leverage, but we are putting it in a context of how we’ve been able to grow our business as well.”
In a separate statement on Wednesday, Frasers Property said its wholly-owned subsidiary acquired Frasers Property Technology (Thailand) for 460 million baht (S$18 million) from Frasers Property (Thailand).
The group said the acquisition is part of its ongoing efforts to sharpen the focus of its strategic business, “gain direct insights” into the data centre business, and allow listed company Frasers Property (Thailand) to focus its resources on its core asset classes.
Shares of mainboard-listed Frasers Property closed down 1.1 per cent or S$0.01 at S$0.875 on Thursday.
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