GuocoLand trebles Q2 profit from office tower sales in Shanghai

SINGAPORE - GuocoLand has more than trebled its second quarter net profit to $42.5 million from $12.9 million previously.

Revenue for the three months to Dec 31 rose by 40 per cent to $355.7 million, mainly due to revenue recognised for the sale of an office tower with gross floor area of some 24,928 square metres in Shanghai Guoson Centre.

During the quarter, the group received deposits from buyers for Shanghai Guoson Centre's service apartments and another office tower.

Sale of the service apartments and office tower will be recognised in subsequent quarters upon completion of the transactions.

Administrative expenses increased from $16.9 million to $41.3 million, mainly due to higher professional fees for the group's operations in China.

Included in other expenses for the quarter was $12.7 million of fair value loss on foreign exchange hedges.

This was offset by a foreign exchange gain of $12.1 million in its underlying assets, recognised under other income.

Tax expense increased by $15.8 million due to higher profit for the current quarter.

Earnings per share firmed to 3.61 cents from 0.94 cent previously while net asset value per share grew to $2.48 compared to $2.36 as at Dec 31.

Looking ahead, GuocoLand noted that the fall in private home prices in Singapore coupled with a volatile global economic environment suggests that market sentiments remain weak.

In China, although new home prices fell in 65 of 70 cities in December last year, sales volume improved in major cities arising from the government trimming borrowing costs and easing property curbs.

"Amidst a continued challenging operating environment, the group will focus on execution, sales and leasing of its current projects," it said.