Perennial Q3 profit soars to S$48.3m on net fair-value gain

A NET fair-value gain gave a fillip to results for Perennial Real Estate Holdings (Perennial) in its third quarter, causing net profit to nearly triple to S$48.3 million from the previous year.

For the three months ended Sept 30, revenue for the real estate and healthcare player expanded 8.7 per cent to S$22.2 million from the previous year, thanks to factors like Capitol Singapore and Perennial International Health and Medical Hub (PIHMH) which started contributing since 2Q 2018, an acquisition fee earned from the healthcare joint venture as a better showing from its Perennial Qingyang Mall and Perennial Jihua Mall.

But its cost of sales swelled 131.4 per cent to S$14.2 million due to the operational costs of Capitol Singapore and PIHMH, pre-opening expenses like hotel staff costs before opening Capitol Kempinski Hotel in October 2018 and advertising and marketing expenses by PIHMH.

Perennial got a boost from a fair-value gain of S$241.9 million from the valuation of two plots on Beijing Tongzhou Integrated Development Phase 1 which were identified for lease. That lifted other income from about S$806,000 to S$242.8 million.

Perennial also experienced higher administrative expenses from the consolidation of Capitol Singapore expenses, higher staff costs, higher professional fees and depreciation incurred on the renovation, fittings and equipment of the new Perennial International Specialist Medical Centre.

It also experienced higher finance costs due to more borrowings as the group consolidated Capitol Singapore's debt and took on more loans to fund investments, as well as due to the expensing off of previously capitalised finance costs for the construction of PIHMH following its completion.

Earnings per share jumped to 2.9 Singapore cents from 1.02 cents in the previous year.

As at Sept 30, the group's net debt to equity ratio stood at 0.75 times. Net asset value per share slipped to S$1.643 as at Sept 30, from S$1.663 cents nine months ago.

The group expects its asset enhancement works for TripleOne Somerset to be finished by 1Q2019, while it explores an en bloc sale of AXA Towers.

It is embarking on works in the Galleria connecting the Capitol Kempinski Hotel which began operations on Oct 1 to the rest of Capitol Singapore property to house various restaurants.

"At the same time, the positioning of the Capitol Singapore mall will be enhanced with new and well-known retail offerings," the company said.

Separately, Perennial announced that it had obtained the independent valuation of Beijing Tongzhou Integrated Development Plot 14-1 & Plot 14-2, Tongzhou Canal One, at 5.4 billion yuan (S$1.1 billion) as at Sept 30. The report is available for inspection at the company's office for the next three months.

Perennial shares ended S$0.015 or 2.2 per cent up at S$0.695 on Wednesday.