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GuocoLand reports 42% drop in Q4 profit to S$141.2 million, on lower unsold stock

REAL estate player GuocoLand saw a slump in both the top and bottom line in the fourth quarter, with the group's stock of unsold residential units down.

Net profit for the three months to June 30 fell by 42 per cent year on year to S$141.2 million, according to audited results released on Sunday evening.

The decline tracked a 52 per cent slide in turnover, to S$197 million, as sales in previous quarters reduced the group's inventory and led to lower revenue recognised for residential projects.

Other income decreased by 44 per cent to S$147.2 million, largely on a lower fair-value gain from the mixed-use Tanjong Pagar Centre's Guoco Tower.

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"However, gross margin for the quarter improved to 35 per cent from 24 per cent in the previous corresponding quarter," GuocoLand added.

GuocoLand noted that Martin Modern, which was launched at the start of FY2018, has a take-up rate of about 60 per cent for its 450 units: "As it is still undergoing construction, the revenue contribution from Martin Modern's sales will be recognised progressively."

The group also said that Leedon Residence has been completely sold, sales momentum of Wallich Residence "has picked up gradually" amid increased marketing, and just 1 per cent of units remain unsold at Sims Urban Oasis, which received its Temporary Occupation Permit in October 2017.

GuocoLand will continue to focus on sales and leasing of projects in Malaysia, "amid challenging operating conditions, which are expected to continue in the near term", it added.

"Combined with the existing project pipeline of mixed-use, commercial and residential developments across Singapore, China (Shanghai and Chongqing) and Malaysia, the group has a healthy pipeline of development projects with a combined gross floor area of approximately 15 million sq ft and a total potential gross development value of over S$11 billion," the group said.

Earnings per share was 12.24 Singapore cents for the quarter, down from 22.06 Singapore cents before, while net asset value rose from S$3.18 a share to S$3.45.

Full-year net profit rose by 7 per cent to S$381.3 million, on a 4 per cent increase in revenue to S$1.16 billion, with earnings boosted by contributions from the joint-venture Changfeng Residence project in Shanghai.

Group president and chief executive Raymond Choong said in a media statement: "GuocoLand has achieved a positive set of results for FY2018, supported by the good sales of our residential developments and healthy occupancy rates at our investment properties.

"We have been active but disciplined in our investment bids and the selective acquisitions of well-located land sites will provide a pipeline of mixed-use, commercial and residential developments."

The board has proposed a first and final dividend of seven Singapore cents a share, unchanged from the previous year.