Hong Fok H2 net profit falls 61.5% as Concourse Skyline sale dips

PROPERTY developer Hong Fok posted a net profit of S$81.2 million for the second half of 2023 on Thursday (Feb 29), a 61.5 per cent drop from its earnings of S$211 million in the year before.

The result translates to earnings per share of 12.66 Singapore cents, against 32.72 cents in the corresponding period in FY22.

H2 revenue fell 39.2 per cent to S$59.8 million.

For the full year, Hong Fok’s income came in at S$110.6 million, down 28.1 per cent from S$153.9 million in 2022; its net profit fell 60 per cent to S$88.1 million, from the S$220.1 million made in 2022.

The company attributed the drop in revenue to a fall in its sale of residential units in Concourse Skyline, a condominium development in Beach Road. The drop was marginally cushioned by a rise in rental income, mainly from Yotel Singapore Orchard Road, and property management income, it pointed out.

The board has proposed a first and final dividend of 1 cent per share, on par with the dividend declared in the previous corresponding period.

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In the year ahead, the company said last year’s hike in Additional Buyer’s Stamp Duty rates on residential properties in Singapore will continue to deter foreign buyers and investors, so the residential market is likely to remain moderately weak, with buying momentum driven mainly by local buyers. 

Nevertheless, the group expects to continue recognising revenue from the sale of residential units in Concourse Skyline, it noted.

It added that it is optimistic about the room rates and occupancy rate of its Yotel hotel, given the expected continued recovery in air travel and tourism demand.

Meanwhile, occupancy rates for its other investment properties are expected to remain stable, the group said, as leasing demand of office and retail units is generally healthy.

The possibility of interest rate cuts in 2024 may improve the performance of the group’s properties, it pointed out. But this may be dampened by higher operating costs such as energy costs, property taxes, commission expenses and maintenance expenses, it stated.

Shares of Hong Fok closed up 4.2 per cent at S$0.86 on Thursday, before the release of the results.