Straits Trading H1 net profit surges 448.9% to S$673m on contributions from real estate segment

STRONG contributions from the real estate segment has propelled The Straits Trading Company to post a net profit of S$673 million for the first half of this year, up by 448.9 per cent or roughly 5.5 times the S$122.6 million net profit posted in the year-ago period. 

The real estate segment delivered a net profit of S$676.1 million in H1 2022, up from S$125.4 million previously mainly contributed by net gain on the disposal of the Group’s stake in ARA Asset Management to ESR Group, according to the mainboard-listed group’s results announced on Thursday (Aug 11). 

Earnings per share rose 5.2 times to S$1.551 for the six months ended June 30, up from S$0.301 in the corresponding period last year.

Total revenue increased 25.5 per cent to S$245.5 million, from S$195.6 million in the first half of 2022. 

Despite global economic headwinds, the group remains focused on disciplined capital deployment and sustainable growth, as well as value creation for its shareholders, said executive chairman of Straits Trading, Chew Gek Khim. 

“We are pleased with our stellar financial performance and position in H1 2022, which reflects the effectiveness of our diversified strategy. Through the years of hard work, the company has delivered a strong set of results for our shareholders, in particular through our investment in ARA,” she added. 

Following the completion of merger between ESR and ARA in January 2022, Straits Trading recognised a value of S$1,076.5 million in a combination of S$142.5 million cash and 214.7 million ESR shares. This represents an 18.2 per cent internal rate of return or 3.7 times equity multiple over the group’s original cost of investment in ARA.

During the first half of the year, Straits Real Estate completed acquisition of 2 office buildings in Docklands, Melbourne in Australia and 4 retail warehouse parks in the United Kingdom. It is also in the closing stages of acquiring a portfolio of office, industrial buildings and several plots of development land in Gloucester Business Park in Gloucestershire, England.

Supported by higher average tin prices, the group’s 52 per cent-owned resources arm Malaysia Smelting Corporation Berhad, reported a 3.8-fold increase in net profit to S$17.4 million in H1 2022 up from S$4.6 million in H1 2021. 

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Meanwhile, the new Pulau Indah Plant, which utilises more efficient technology, targets to achieve full operational capacity in Q4 2022. The plant is expected to perform at higher efficiency, lower operational and manpower costs, while reducing its overall carbon footprint, the group said. 

The hospitality segment returned to the black with a net profit of S$0.9 million in H1 2022, from a loss after tax and non-controlling interest of S$5.2 million in H1 2021. 

“The improvement in performance was underpinned by stronger corporate and leisure travel demands as more countries reopened their borders,” the filing noted. 

The counter closed down S$0.02 or 0.67 per cent at S$3.02 on Thursday, before the announcement was made.