Ho Bee's recurring income strategy pays off

Singapore

HO Bee Land's strategy of building a strong recurring income base has borne fruit as seen in its third-quarter financial report card.

Net earnings rose 83.7 per cent to S$13.45 million for the three months ended Sept 30, 2014, from S$7.33 million in the same year-ago period.

Group turnover climbed 64.8 per cent to S$26.82 million as a result of higher revenue from investment properties. This was primarily contributed by the rentals of three office buildings - The Metropolis in Singapore, and Rose Court and 1 St Martin's Le Grand in London.

The group has just completed its acquisition of another commercial building in London - 60 St Martin's Lane in Covent Garden, for £43.9 million.

The prime office and retail building was comprehensively redeveloped in 2011 behind a striking retained Portland Stone facade. The building was built around a modern steel frame and boasts a double-height reception area. Internally, it has six floors of Grade A offices and a substantial retail/restaurant unit at ground and lower ground floor level.

Besides strong rental income flow, Ho Bee's Q3 bottom line was boosted by a S$7.63 million writeback of accrual upon finalisation of construction cost for development projects - mostly for its Trilight condo in Newton Road.

Earnings per share increased to two Singapore cents for Q3 FY2014 from 1.1 cents in Q3 FY2013. Net asset value per share was S$3.44 as at Sept 30, 2014.

For the first nine months, Ho Bee's net earnings fell 65.3 per cent to S$29.75 million. The higher earnings in the same year-ago period were due to the S$47.2 million gain on sale of investment interest in Chongbang Holdings in China and S$25.9 milion gain on sale of Hotel Windsor in Singapore.

Ho Bee's net gearing increased to 0.35 time as at Sept 30, 2014 from 0.15 time as at Dec 31, 2013.

Rental contribution from The Metropolis office development in Buona Vista can be expected to increase in Q4 FY2014 and Q1 FY2015 arising from commencement of operations by anchor tenant Procter & Gamble, which has started fitting out its space and will move in by the end of this month.

In Sentosa Cove, Ho Bee is continuing to lease out unsold units in its condo projects until the market in the location recovers. At the 91-unit Turquoise, 41 of the 48 unsold units have been leased. Tenants have also been found for 87 of the 103 unsold units at the 151-unit Seascape. Some 90-plus units at the 302-unit Cape Royale have been leased. Monthly rents for three bedroom apartments of about 1,700-1,900 sq ft at Cape Royale are S$8,000-10,000, while four-bedders of about 2,500 sq ft are fetching S$12,000-13,000.

"The residential market in Singapore remains challenging. The group will continue to look for opportunities overseas," said Ho Bee Land's chairman and CEO Chua Thian Poh.

The group has residential development projects in Australia and China.

Ho Bee shares closed trading on Thursday at S$1.98, up 3.5 cents.