SINGAPORE - City Developments Limited (CDL), the real estate group of tycoon Kwek Leng Beng, has reported a net loss of $32.1 million for the first half of the year, dragged down by higher tax expenses.
The company had reported a profit of $3.1 million for the first half of last year, after recognising a Covid-19 tax credit of $17.6 million from the New Zealand government.
Tax expenses for the period under review came to $28.5 million, up from $13.4 million last year. Pre-tax profit totalled $9.7 million, down from $13.8 million previously.
Despite the net loss, the company will pay a special interim dividend of three cents per share.
Group revenue for the six months ended June 30 rose 11.1 per cent to $1.2 billion, from $1.1 billion last year. It was boosted by property development, which saw turnover increase by 35.5 per cent.
CDL’s hotel and property investment revenue streams have remained muted with travel restrictions still largely in place for most countries.
But the company said all its business segments are in positive territory except hotel operations.
The investment properties business generated lower rental income due to lower footfall at its malls. Since March, its Jungceylon mall in Phuket, Thailand, has been temporarily closed due to the lack of international tourists.
In Singapore, the company sold 971 residential units, with total sales amounting to $1.7 billion in the first half, compared with 356 units in the first half of last year for $514.7 million.
The strong sales were largely due to the launch of Irwell Hill Residences in April, with 347 out of 540 units sold to date. Other projects that are selling well include Amber Park and Sengkang Grand Residences.
CDL has a launch pipeline of close to 2,000 residential units from four upcoming properties. In the fourth quarter of this year, it will launch the Canninghill Piers together with CapitaLand.
Due to a shortage of construction workers, CDL said, all of its projects have been delayed by four to six months.
The company added that a recent spike in building material costs, such as steel bars and aluminium, is expected to taper within the next six to 12 months.
The results come after CDL’s record loss of $1.9 billion last year, largely due to impairments from backing Chinese developer Chongqing Sincere Yuanchuang Industrial, which had to face a bankruptcy application by a China-based creditor.
CDL continues to view China as an important market despite a recent regulatory clampdown, and is reformulating its strategy, said chief executive Sherman Kwek at a results briefing on Thursday (Aug 12).
He said the company is looking at student rentals and new economy assets, such as data and logistics centres, with “interest and caution”, adding that the ability to scale is key for such investments.
For the rest of the year, the company expects hotel occupancies and revenue to improve as border restrictions are eased and vaccination rates climb.
Mr Kwek, CDL's executive chairman, expects higher vaccination rates and quarantine-free travel to boost the hospitality sector’s recovery, saying this is already gaining traction.
“We are optimistic of a stronger rebound by the end of 2021 and in early 2022, and expect strong latent demand for travel domestically and regionally with further upside once international travel is allowed,” he said in a statement.
Shares of CDL closed at $6.76, up 15 cents or 2.27 per cent.