First Sponsor’s second-half net profit plunges 96.8% to $1.9 million on lower property handover volume in China

SINGAPORE - Mixed property developer First Sponsor Group on Feb 20 booked a net-profit slide of 96.8 per cent to $1.9 million for the second half ended Dec 31, 2023, from $59.9 million a year earlier.

The results come as the group’s top line for the period decreased 52.9 per cent year on year to $147 million, from $312.2 million. This in turn was the result of lower revenue from the sale of properties and property financing, though it was partially offset by revenue increases from hotel operations and rental of investment properties.

In particular, revenue from the sale of properties plunged 90.1 per cent to $18.2 million in the second-half of the 2023 financial year. This was driven by the absence of significant inventory handover from The Pinnacle project in Dongguan, China.

First Sponsor explained that the project is mostly sold and completed, with only two small office, home office (Soho) units and three retail units handed over in the second half of FY2023.

There were 168 residential, 45 Soho and two retail units, as well as 111 car park lots handed over in the year-ago period, it added.

Despite the falls, the group, which has operations in China and the Netherlands, said its overall gross margin for the period remained fairly consistent at 45.2 per cent, compared to 44.8 per cent a year ago.

First Sponsor’s second-half earnings per share stood at $0.0019, down from $0.0649 in the second half of FY2022.

The group has declared a final dividend of $0.031 per share for FY2023, higher than the FY2022 final dividend of $0.027 per share.

The FY2023 final dividend will be paid on May 27, subject to shareholder approval at the group’s annual general meeting.

Together with its interim dividend of $0.011 per share in H1 FY2023, this brings the total dividend for FY2023 to $0.042 per share.

For the full year ended Dec 31, 2023, First Sponsor recorded a net profit of $12.5 million, down 90.5 per cent from $131.3 million in FY2022.

Full-year revenue also slid 33.8 per cent year on year to $282.9 million, from $427.5 million. The group attributed this to the revenue from sale of properties decreasing by 82 per cent, arising from a lack of significant inventory handover.

First Sponsor noted that property market sentiments in China worsened in this half-year with even weaker buying confidence, adversely affecting pre-sales for its projects.

“Despite slow pre-sales, the group does not intend to significantly compromise on the selling prices of these projects, but will instead adopt a longer-term view as appropriate, continuing to sell them with an operating profit margin,” it said.

The group noted that a “substantial number” of these projects will be able to commence at least a partial handover during FY2024, and that it may be able to account for such additional sales, should there be a positive turnaround of buying confidence.

Meanwhile, in the Netherlands, the group’s Dreeftoren redevelopment project in Amsterdam will be delayed by six months due to the facade contractor filing for bankruptcy in September 2023.

“The targeted completion dates have been revised to Q2 2025 and Q2 2026 for the office and residential tower, respectively,” said First Sponsor.

The counter ended unchanged on Tuesday at $1.19, before the results release. THE BUSINESS TIMES