Higher fair-value gains on its investment properties gave a lift to earnings for UOL Group (UOL) in its second quarter ended June 30, outweighing lower revenue recognition from its development projects and higher finance expenses.
Net profit for the developer and hotel operator shot up 48.1 per cent to $195.4 million from the previous year's $131.9 million.
Fair-value gains on investment properties nearly trebled to $181.9 million from $64.4 million. Before fair-value and other gains, group pre-tax profit was 7 per cent lower at $141.8 million, as revenue fell 19.7 per cent to $512.3 million from the preceding year.
This was due to the absence of contribution from Principal Garden in Prince Charles Crescent, which obtained its temporary occupation permit last December, and lower progressive revenue recognition from The Clement Canopy in Clementi and Botanique at Bartley. These latter two projects were completed in March and April, respectively.
Revenue from property investments rose 3 per cent to $137.8 million, due to contributions by UIC Building in Shenton Way and 72 Christie Street in Sydney, Australia, acquired last December.
Revenue from hotel ownership and operations was down 3 per cent to $151.3 million, mainly from lower occupancies and room rates at Marina Mandarin hotel and Parkroyal Darling Harbour in Sydney, as well as ongoing refurbishments at Parkroyal on Kitchener Road.
Finance expenses rose 28 per cent to $29 million as the group borrowed more for its purchase of Marina Mandarin Singapore and parts of the Marina Square complex. Earnings per share increased to 23.18 cents from 15.67 cents in the year-ago period. The group does not declare interim dividends.
For the first half of the fiscal year, net profit rose 29 per cent, driven by higher attributable fair-value gains of $103.7 million.
AT A GLANCE
REVENUE: $512.3 million (-19.7%)
NET PROFIT: $195.4 million (+48.1% )
UOL said prices for new private homes in Singapore are expected to remain relatively stable.
Group chief executive Liam Wee Sin said: "In the first half of 2019, the take-up for new projects was 6 per cent higher than in the preceding year, notwithstanding the cooling measures introduced on July 6 last year. We see resilience in the market and potential further upside for selected projects with strong location and product attributes."
As for office rents, they should be helped by steady demand and tightening vacancy, while retail rents will remain under pressure amid "tepid economic growth", the company said in a statement.
The group said economic and political uncertainties from Brexit continue to weigh on the London residential property market, but leasing activities remain resilient in Midtown, where the group owns two commercial properties.
It also plans to launch Avenue South Residence, which is near Outram, by the end of this month.
UOL shares finished up 4 cents, or 0.6 per cent, at $7.20 yesterday.