GuocoLand's half-year net profit falls 69% to S$22.9m

GUOCOLAND's half-year net profit has more than halved year on year to S$22.9 million, thanks to higher tax expenses on its project in Shanghai, China.

On Thursday, Guocoland reported that its net profit fell 69 per cent from S$74.5 million for the six months ended Dec 31, 2020. Topline dropped 44 per cent to S$319.6 million, from S$572.1 million a year ago.

Earnings per share was at 1.20 Singapore cents, versus 5.86 cents a year ago.

Guocoland noted that the drop in its net profit was mainly due to higher tax expense of S$31.9 million in the first half of FY2021, from related taxes for the disposal of the cultural building within its Guoco Changfeng City project in Shanghai.

Higher tax expenses were partially offset by a 58 per cent increase in other income to S$25.2 million, partly due to the fair-value gain on derivative financial instruments and the completion of the disposal of the cultural building within the same project, it said.

Meanwhile, the fall in revenue was mainly attributed to lower progressive recognition of sales from its Singapore residential projects - specifically as construction of the luxury condominium Martin Modern reaches its tail end, said Guocoland. It is expected to achieve its temporary occupation permit in 2021.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

As at Dec 31, its residential developments in Singapore - Martin Modern, Meyer Mansion and Midtown Bay - had sold 90 per cent, 24 per cent and 26 per cent of their units respectively. Separately, Guocoland noted that Wallich Residence is 63 per cent sold and continues to register sales with prices remaining firm.

While revenue from the group's investment properties remain stable when compared against the preceding corresponding period, revenue from the hotel business fell by 75 per cent, following "adverse impacts" on demand for travel and hotel accommodation due to the Covid-19 pandemic, it said.

Gross profit fell 47 per cent to S$95.0 million, and gross profit margin for the group remained at approximately 30 per cent.

Meanwhile, the group's other income rose 58 per cent to S$25.2 million, up from S$16.0 million a year ago, partly on the back of the fair-value gain on derivative financial instruments for the period, the group said. In the previous corresponding period, this was a fair-value loss; which explains the drop in the other expenses by 93 per cent to S$1.1 million in the current period.

Contributing to the increase in other income was also the completion of the disposal of the Changfeng cultural building in Shanghai for a consideration of 610 million yuan, it added.

Raymond Choong, GuocoLand's group president and chief executive, said: "Despite the headwinds, we remain in a strong position to deploy our balance sheet towards strategic land acquisition opportunities."

He added that GuocoLand will continue to leverage its real estate expertise to develop properties that support future work and lifestyle trends, while building its portfolio of recurring income for sustainable growth.

The group's investment properties continued to contribute to its recurrent income, it said.

Guoco Tower registered committed occupancies of 91 per cent for its office component and 99 per cent for its retail component as at Dec 31. Occupancy of 20 Collyer Quay stood at 95 per cent.

As at Dec 31, GuocoLand had a net debt of S$4.2 billion and gearing of 1x. Cash and cash equivalents increased by 7 per cent to S$998.3 million.

Equity attributable to ordinary equity holders as at Dec 31 stood at S$3.82 billion, while net asset value per share was S$3.44.

Shares of GuocoLand closed down two Singapore cents, or 1.3 per cent, at S$1.56 on Thursday.