Ho Bee's Q1 profit falls 44%, hit by lower recognition of sales in Shanghai

LOWER sales and profit recognition from its residential development project in Shanghai, as the project is almost fully sold, caused Ho Bee Land's first-quarter net profit to fall 44 per cent drop to S$27.7 million, it said on Tuesday.

The year-on-year decline in net profit was primarily due to a drop in the share of profits from associates amounting to S$4.3 million, from S$28.5 million a year ago, it said.

The group also incurred net losses of jointly controlled entities of S$400,000, versus a net profit of S$1.7 million a year ago, largely due to the loss from its residential development project in Tangshan.

For the three months ended March 31, 2019, revenue rose 8 per cent to S$52.4 million, thanks to higher rental income which rose 36 per cent to S$51.2 million, mostly due to an increase in rental income from Ropemaker Place, a London investment property which it acquired in June 2018.

In contrast, sale of development properties dropped a whopping 89 per cent to S$1.2 million, as the group had sold a small site in Gold Coast, Australia for A$5.5 million (S$5.3 million) and also sold more units in its Australian development projects such as Rhapsody in Gold Coast and Pearl in Melbourne in the corresponding quarter a year ago. Pearl was fully sold in FY2018.

For the quarter, earnings per share was 4.16 Singapore cents, compared to 7.42 cents a year ago.

Looking ahead, the company said that the Singapore office market remains positive amid stable demand and tight supply. On the other hand, the residential market is expected to remain challenging because of the cooling measures and supply glut.

In the United Kingdom (UK), it expects the uncertainties surrounding the Brexit outcome to continue to weigh on the economy. However, the long tenancies of the leases for its London properties will buffer the firm against any short-term negative impact. Ho Bee remains confident of the resilience of the UK economy in the long term, it said.

Ho Bee shares ended the day one Singapore cent higher at S$2.55.