GuocoLand Earnings Sink 25% To $34m

Source : The Straits Times, Jan 31, 2008

INVESTORS might be tempted at first to blame a slowing housing market for a 25 per cent slide in GuocoLand's second-quarter earnings.

A closer scrutiny of the property developer's accounts, however, shows that for the quarter ended Dec 31, it actually reaped higher revenue from its property development projects in Singapore and China.

In fact, the explanation for the profit slump was the sale of its long-term investment in BIL International in the second quarter ended Dec 31, 2006, which boosted its bottom line in the earlier period to the tune of a $19.3 million one-off gain.

GuocoLand's net profit for the second quarter ended Dec 31 plunged to $33.9 million, from $45.4 million a year earlier. With the one-off gain stripped out, net profits were well up this year.

Revenue soared 112 per cent to $211.1 million, up from $99.6 million in the previous period.

Gross profit rose from $16.4 million to $40.2 million, with contribution from its West End Point project in Beijing.

West End Point, an 810-unit development in the Xicheng District of Beijing, is almost fully sold, GuocoLand said yesterday.

In Singapore, GuocoLand has three launched developments on the market: Le Crescendo, The View@Meyer and The Quartz.

As at this month, it achieved sales of about 90 per cent for Le Crescendo, The View@Meyer and the launched units in The Quartz.

GuocoLand said it has, in the pipeline, 'prestigious' residential developments in prime districts which will be built on the sites of the existing Sophia Court and Leedon Heights.

Earnings per share for the quarter fell from 7.31 cents to 4.02 cents, while net asset value per share remained unchanged at $2.30.

GuocoLand said that although the spectre of a recession is looming over the United States, the major economies of China and India are nonetheless expected to remain resilient.

Still, it noted that with the withdrawal of the deferred payment scheme in October, buyers are turning 'more cautious' in view of the 'downside risks' arising from the continuing global credit fallout, high oil prices, weak equity market sentiments and rising inflation.