GuocoLand Q4 profit plunges 42%

GuocoLand Limited reported a 42 per cent slump in net profit for the fourth quarter ended June 30 to S$107.31 million, dragged by lower revenue and fair value gain on investment properties.

Revenue, which fell 48 per cent to S$254.7 million during the quarter, took a hit from lower revenue recognised for China projects as Seasons Park in Tianjin was almost fully sold in current year.

But despite the drop in revenue, gross margin rose to 41 per cent in the fourth quarter, up from 30 per cent in the year-ago period arising from a change in sales-mix.

Other income marked a 37 per cent drop year on year to S$81.1 million mainly due to lower fair value gain recognised for investment properties in current quarter.

The share of results of associates and joint ventures also swung to a S$40,000 loss from a S$14.35 million profit in the year-ago period. GuocoLand explained that this is due to lower profit recognised for completed developments in Malaysia where sale revenue is recognised on completion basis.

The group ended the financial year with a 26 per cent drop in net profit to S$226.4 million on the back of a 7 per cent fall in revenue to S$1.16 billion.

Singapore continues to be the main contributor of the group's revenue and profit for the year ended June 30, accounting for S$714.7 million of revenue, similar to the previous financial year.

"The group expects operating conditions to remain challenging and will continue its focus on sales and leasing of its current projects while remaining watchful of investment opportunities," GuocoLand said in its financial statement.

In Singapore, the broad property market remains subdued; in Malaysia, the property market has softened as political and economic uncertainty weigh down on the sector, it added. Meanwhile, new home prices in China rose for a third consecutive month in July.

The Board proposed a first and final dividend of 5 cents per ordinary shares, unchanged from a year ago.

GuocoLand had in July entered into a conditional share sale agreement for the proposed RM189 million (S$62.52 million) sale of a Malaysian subsidiary that owns a 33-storey office building, located within the on-going integrated development project Damansara City Kuala Lumpur.

In August, it announced that its wholly-owned unit, GuocoLand (China) Limited, had entered into a master transaction agreement with China Cinda Asset Management Co to dispose all the equity, contractual and loan interest in Beijing Dongzhimen project (DZM project), an integrated mixed-use development, for 10.5 billion yuan (S$2.3 billion). The transaction is expected to generate a net gain of about S$480 million in the quarter ending Sept 30, 2015.