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OUE Q1 net profit jumps to S$87.1m
MAINBOARD-LISTED property group OUE’s first-quarter earnings swelled with help from currency gains on the greenback and higher mark-to-market fair-value gains on certain investments, it said in an interim business update on Friday.
Since then, though, its investment and hospitality divisions have taken a hit from the novel coronavirus pandemic, going by the presentation slides put up on the Singapore Exchange website.
Net profit jumped to S$87.1 million for the three months to March 31, from S$1.0 million in the year before, while revenue increased by 26.4 per cent to S$186.2 million.
The rise in turnover was on the back of contributions from the Mandarin Gallery mall, after the merger between real estate investment trusts OUE Commercial Reit and OUE Hospitality Trust, as well as higher sales completion at the OUE Twin Peaks project.
These gains more than made up for the weaker showing in hospitality, as well as the lack of revenue from the serviced apartment business, which was sold off at the end of last year.
Net asset value was S$4.67 a share as at end-March, against S$4.52 as at Dec 31, 2019.
Still, the measures to contain the coronavirus rolled out in OUE’s operating markets of Singapore, the United States and China “have negative near-term financial impact”, OUE told investors.
“The group is focusing on cost management, cash conservation and maintaining financial flexibility in (the) current environment,” the group reported, stressing that it has suspended “non-essential capital and operating expenditure” across its various business units.
Singapore investment property assets face a longer leasing lead time and disruption in activities such as viewings and handovers, as well as a decline in shopper traffic.
Most of the tenants’ offices in the US Bank Tower in Los Angeles are closed amid a shutdown of non-essential workplaces. Lippo Plaza in Shanghai has faced extended office hours and shorter retail hours, although there has been a gradual return to normal operations there since end-March.
Meanwhile, the Mandarin Orchard and Crowne Plaza Changi Airport hotels are expected to clock a year-on-year drop in overall occupancy and food and beverage and banquet business - even though OUE noted in its presentation that it still cannot determine the full extent of the pandemic’s toll on hospitality revenue will be.
The counter added S$0.01, or 0.9 per cent, to S$1.12, on a cum-dividend basis on Friday, before the interim business update was released.