Frasers Property remains keen on Singapore housing development but is cautious over entry costs and margins

FRASERS Property posted a net profit of S$148.9 million for the second half of its financial year ended Sep 30, reversing losses of S$52.6 million in the same period the prior year.

This came as revenue for H2 FY2024 stood at S$2.7 billion, up 33.2 per cent from S$2 billion the previous year, it said on Wednesday (Nov 13). 

At the company’s full-year results briefing on Wednesday, group chief executive Panote Sirivadhanabhakdi said a key focus for the group is to increase its development exposure in the residential segment, which will offer better risk-adjusted returns. 

“We are looking at more opportunities where we have capabilities on the ground (in) Australia, Singapore and Thailand,” he said.

“In Singapore, we are more cautious (about) what the right entry costs are and the right margins we should be receiving as well, if we deploy capital.” 

Soon Su Lin, chief executive officer of Frasers Property Singapore, said: “We remain committed to development in the Singapore market and we will play strategically to achieve the right returns while maintaining capital efficiency.”

She added: “We will continue to review opportunities presented in government land sales and private treaty deals, especially those with positive locations and good site attributes. As has been seen (in) the successful launches in recent weeks, I think the market remains very resilient and there’s still good demand from residential buyers.” 

When asked about the long-term serviced apartment site at Media Circle, which a Frasers-led consortium had bid for but it was not awarded, Frasers Hospitality chief executive Eu Chin Fen said the group remains “very interested” in the sector. 

“We will continue to be supportive of government efforts to expand products for long-stay rental. We are still positive that long-term rental in the Singapore market remains very resilient… I think this space will still continue to attract people wanting to come here to work.”

The company attributed its improved performance to contributions from residential projects in Singapore and China, and its share of fair-value gains from a joint venture’s industrial and logistics properties in Australia.

In China, profit before interest and tax more than quadrupled from S$41.4 million in FY2023 to S$184.8 million in FY2024, due to higher levels of sales and settlements of residential units and warehouses. 

Panote said: “China has been a market we won’t avoid but we will be very careful. The position we have (taken) even through Covid-19 has us selecting the right partner, selecting the right projects, and achieving the right returns.” 

Lim Hua Tiong, Frasers Property’s chief executive officer of emerging markets, Asia, noted how land auction activity in Shanghai has “warmed up” in the last six months.

He said: “We are observing – in fact, most of the developers are observing – the current market now… We are looking at some opportunities (and) we’re working with some of the stronger developers together on a joint bid for the land auction.” 

The group’s H2 fair-value losses in relation to investment properties held by its subsidiaries decreased 55 per cent to S$198.5 million, from the S$441.8 million it logged for the same period in the previous year. 

The net losses came from its commercial properties in the UK and Australia and were offset by fair-value gains from its properties in Singapore, as well as its industrial and logistics properties in Australia and Europe. 

Its earnings per share for the half-year period stood at S$0.033, compared to its loss per share of S$0.019 previously.  

For the full year, Frasers Property’s net profit rose 19.2 per cent to S$206.3 million from S$173.1 million in the corresponding period of the previous year. 

Revenue for the full year stood at S$4.2 billion, up 6.8 per cent from S$3.9 billion for FY2023. 

Giving an update on One Bangkok, the massive mixed-use project Frasers Property is developing in Thailand, Panote said that two of the five office buildings have commenced operations. 

Committed occupancy for the two shopping malls which opened in October stood at 85 per cent. The third mall, which is expected to have luxury fashion houses and Michelin-starred restaurants, is slated to open at a later phase. 

Daily footfall at One Bangkok has averaged 150,000 per day, said Lim, who is also chief executive officer of One Bangkok. 

When asked whether Frasers Hospitality Trust (FHT) could be privatised following changes to its Australian subsidiary’s tax status, Eu said “there are no conversations on the table” currently on that.

Distributions from FHT Australia Trust in respect of FY2024 would be subject to an effective Australian tax rate of 37.5 per cent, after the completion of a share swap deal that was entered into in July.

Long term, there is still growth potential for the hospitality sector but it will be moderated, Eu said.

While tourism demand is supported by Mice (meetings, incentives, conferences, and exhibitions) events, Chinese tourists have not fully returned, she added. 

The board proposed a first and final dividend of S$0.045 per share, unchanged from the year before.

Shares of Frasers Property closed S$0.03 or 3.4 per cent higher at S$0.915 on Wednesday.