SLB posts Q2 net profit of S$3.6m, enters fund management JV

PROPERTY player SLB Development recorded S$3.6 million in earnings for the second quarter ended November, lifted by revenue from the Mactaggart Foodlink project, reversing the company's year-ago S$726,000 loss.

This translates to an earnings per share of 0.4 Singapore cent, compared to a 0.08 cent loss per share a year ago. 

Separately, the company announced that it is diversifying into fund management. SLBF, a unit of SLB, entered an agreement on Dec 12 with 32 Holdings and an individual, Jeremy Choy Chun Min, to establish a fund management company, 32 Real Estate.

The JV will pursue investments in real estate funds and various segments of the real estate value chain, including land acquisition, planning and design, construction and investment into technologically innovative products or new business models for the real estate markets.

The move comes after SLB's maiden investment in a UK residential fund focused on the growing private rented sector, the Pinnacle Residential Fund, in October 2019. 

Q2 revenue rose 55.5 per cent year-on-year to S$12.1 million, mainly due to the rise in contributions from Mactaggart Foodlink. The company also recorded S$1.2 million in other income, more than twice the year before, due to S$500,000 in interest income from loans to associates, as well as a S$600,000 gain on disposal of a subsidiary. 

Other operating income increased by S$1.2 million or 180.3 per cent from S$0.7 million in 2Q2019 to S$1.9 million in 2Q2020 mainly due to an increase of S$0.5 million and a S$0.6 million gain on disposal of a subsidiary, Wellprime Pte Ltd as announced by the company on Sept 25, 2019.  

For the half-year, SLB recorded a S$5.5 million net profit, reversing the S$4.8 million year-ago loss. However, revenue fell 37.8 per cent to S$19.8 million, due to the absence of revenue contribution from T-Space @ Tampines, as the project was completed in June 2018.

SLB said that it is "cautious when seeking opportunities to replenish its land bank and will continue to explore business opportunities in the region through acquisition, joint ventures and/or strategic alliances that will complement its property development business". 

"In 2020, we aim to build up our growth momentum and prudently seek suitable opportunities to further diversify our income streams for sustainable future growth," said CEO Matthew Ong. 

On the decision to diversify into fund management, he added: "As part of our continued efforts to diversify our income streams, the establishment of a fund management business will help to drive long-term, sustainable value for the Group and create new business opportunities."

SLB shares closed flat at S$0.118 on Monday.