BT : Smaller developers post strong results too

Business Times - 18 May 2010

Smaller developers post strong results too

By JAMIE LEE

SEVERAL smaller property companies followed in the footsteps of their bigger peers, posting strong results in the latest quarter ended March.

Property and hotel operator Fragrance Group posted a 42.6 per cent surge in its first-quarter net profit to $14.4 million, thanks in part to higher selling prices of its units. It registered a higher gross profit margin of 42.2 per cent, up from 23.6 per cent recorded in the same period a year ago. The increase in net profit came despite a 17.7 per cent drop in revenue to $41.8 million, dragged by lower sales in the property development division, which made up nearly 80 per cent of total revenue. It contributed $32.6 million in sales, down 23.8 per cent from a year ago, which largely came from the sale of units at 138-unit project Parc Imperial that would soon be completed. The fall in revenue was partly offset by higher sales in its hotel division under its Fragrance Hotel chain. This rose 15 per cent to $9.23 million. This month, it placed the highest bid of $16.3 million for a private residential plot along Tampines Road, or about 700m from Kovan MRT Station.

Orchard Parade Holdings - a subsidiary of Far East Organization - also posted sterling numbers. Net profit for the developer - which runs Orchard Parade Hotel - stood at $9.3 million, up from $107,000 a year ago. This was thanks to firmer sales and a fair-value gain on its investment properties, as opposed to a revaluation loss posted a year ago. Revenue more than doubled to $28.1 million from $11.7 million mainly due to sale of units of the residential project Floridian, which it is developing with Wing Tai Holdings. Revaluation of its investment properties also reaped a gain of $1.56 million, contrasting with a loss of $3.05 million a year ago.

Lee Kim Tah Holdings - which owns 50 per cent of Jurong Point Shopping Mall - said net profit for the first quarter jumped 84.5 per cent to $9.53 million, thanks to a surge in sales. The company posted a more than tripling in revenue to $40.8 million from $12.6 million a year ago, largely due to the sales from the completed residential development in Neutral Bay, Australia.

Hiap Hoe bucked the trend despite higher revenue, dragged by a slow recognition of sales from one of its residential projects. It reported a 43.5 per cent plunge in net profit to $3.9 million for Q1. Sales, however, were up 68.7 per cent to $26 million. Due to huge marketing costs for Waterscape at Cavenagh - which was launched in that quarter - the group's selling and distribution expenses surged to $6.5 million from $21,000 a year ago.

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