Perennial Q2 profit halves to $8.6m with Capitol fully consolidated

Perennial Real Estate Holdings' second-quarter net profit halved to $8.6 million from $17.1 million a year ago as it fully consolidated debt and costs of Capitol Singapore and recognised lower fair value gains in China.

On a per-share basis, profit for the three months ended June 30 fell to 0.52 cent from 1.03 cents a year earlier, the property developer said.

No dividend was declared.

For the first six months of the year, net profit fell 75.3 per cent to $13.8 million, or 0.83 cent per share, partly due to the absence of a year-ago one-off gain from the partial divestment of TripleOne Somerset.

Second-quarter revenue grew 1.6 per cent to $18.1 million as it fully consolidated revenue from Capitol Singapore with effect from May.

In China, the Perennial Qingyang Mall in Chengdu and the Perennial Jihua Mall in Foshan also performed better, while the Perennial International Health and Medical Hub (PIHMH) contributed a new stream of revenue with its June launch.

Cost of sales nearly doubled to $9.5 million from $4.9 million, due to Capitol Singapore property maintenance expenses and the opening expenditure and property maintenance expenses of PIHMH.

  • AT A GLANCE

  • REVENUE: $18.1 million (+1.6%)

  • NET PROFIT: $8.6 million (-49.5%)

The consolidation of Capitol Singapore's debt and additional loans taken to fund new investments pushed finance costs up 42.1 per cent to $20.7 million for the quarter, further weighing on the bottom line.

Perennial's net debt to equity ratio stood at 0.74 times as of end-June, higher than the end-2017 ratio of 0.57 times. Net asset value per share grew to $1.704 as of June 30, from $1.663 a year ago.

Looking ahead, Perennial said it plans to rejuvenate Capitol Singapore with new tenants. It will also continue its strategy of strata sales and asset enhancement for AXA Tower and TripleOne Somerset, and pursuing acquisitions or land tenders to grow the Singapore portfolio.

In China, the developer said it will focus on developing existing projects.

"With the opening of PIHMH in Chengdu and the full ownership of Capitol Singapore, our focus is now on optimising these landmark developments to deliver a good stream of annuity income," said chief executive Pua Seck Guan.

"While we continue to build up our high-speed rail portfolio in China, we will concurrently adopt an active portfolio reconstitution strategy to recycle capital from our Singapore and China assets to maximise capital efficiency."

Perennial shares yesterday slipped half a cent to 80.5 cents.

A version of this article appeared in the print edition of The Straits Times on August 04, 2018, with the headline 'Perennial Q2 profit halves to $8.6m with Capitol fully consolidated'. Print Edition | Subscribe