Hatten Land's Q2 profit down 49.4% on higher expenses

Harbour City (above), a mixed development that features retail and hospitality establishments and a theme park off the coast of Malacca. Looking ahead, the group intends to explore opportunities beyond Malacca, and is looking to grow its business in
Harbour City (above), a mixed development that features retail and hospitality establishments and a theme park off the coast of Malacca. Looking ahead, the group intends to explore opportunities beyond Malacca, and is looking to grow its business in Klang Valley.PHOTO: HATTEN GROUP

SINGAPORE - The net profit of Malaysian property developer Hatten Land Limited fell 49.4 per cent to RM10.8 million (S$3.63 million) for the second quarter ended Dec 31, 2017, on the back of higher selling and distribution expenses, as well as general and administrative expenses.

This translated to an earnings per share of 0.79 sen for the quarter, down from 1.80 sens last year.

According to Hatten, selling and distribution expenses increased by RM2.2 million, or 29.2 per cent, for the quarter as the group intensified sales and marketing efforts for its projects under the "current challenging property market in Malaysia".

In addition, general and administrative expenses also increased by RM4.3 million, or 64.2 per cent, for the quarter mainly due to one-off costs in relation to the issuance of shares to employees, additional corporate expenses incurred following a reverse takeover in January 2017, as well as a non-recurring back-charged of third party expenses for the last corresponding financial period.

For the second quarter, revenue dropped to RM43.4 million from RM113.8 million in the year-ago period, due to construction delays at Hatten City Phase 2, partially offset by higher contributions from sales at Harbour City and Hatten City Phase 1.

No dividend has been declared for the second quarter of fiscal 2018, unchanged from the previous year.

In 2018, the group remains on track to launch Harbour City Luxury Hotel, the last phase of its flagship Harbour City project in Malacca.

On its website, the developer described Harbour City as a mixed development consisting of a mall, a water theme park and three hotel blocks.

Hatten's executive chairman and managing director, Mr Colin Tan, noted that Malacca was the second most visited state in Malaysia in 2017, with 16.7 million tourists.

He said: "The state's growth is anchored by mega infrastructure and tourism projects which will bolster the value of our properties and underpin future demand."

He added that the completion of phase 2 of Hatten City, which is expected in the third quarter of the 2018 financial year, will allow the immediate conversion of sales into billings.

"Furthermore, we enter H2 FY18 with unbilled sales of RM907 million, which provides clear earnings visibility," he added.

Looking ahead, the group intends to explore opportunities beyond Malacca, and is looking to grow its business in Klang Valley, an area centred in Kuala Lumpur.

Shares of Hatten last traded down 6.86 per cent to S$0.16 on Friday (Feb 9).