Friday, May 11, 2012

CDL's Q1 profit falls 45% to $156.7m


Business Times: Fri, May 11
CITY Developments Limited (CDL) posted a 44.5 per cent or $125.6 million year-on-year drop in group net profit to $156.75 million for the first quarter due chiefly to the absence of substantial gains booked in the year-ago period from the disposal of The Corporate Office along Robinson Road.

Thinner profit margins for its recent Singapore residential project launches also caused the weaker bottom line.

The property and hotel group said it expects to remain profitable in the current year, endowed with a "diversified portfolio of assets, strong balance sheet and prudent management". It also unveiled plans for two upcoming 99-year-leasehold Singapore residential property launches. It is preparing to launch "very shortly" the 70-unit UP@Robertson Quay, which will comprise luxurious apartments and loft residences. There will be one-bedders, one-bedroom-with-study units and two-bedders and buyers will have a choice of layouts.

The residences will be part of an integrated development that will also include a 300-room new lifestyle concept hotel known as M Social, an extension of the M brand minted by CDL's London-listed unit Millennium & Copthorne Hotels, which will be managing the hotel. Residents of UP@Robertson Quay will be able to enjoy housekeeping, laundry and other hotel-related services at a fee.

The second project slated for release in H1 is Haus@Serangoon Garden, with 96 terrace houses.

CDL said that with the gradual global economic recovery, albeit at a more cautious pace, it is optimistic that this will help to improve sentiment for the high-end residential market. The group continues to achieve steady sales every week for its mass-market private housing and executive condo projects. It has sold 290 units at Bartley Residences since the project's release in February.

"The group has always maintained a medium to long-term view of its business. With a healthy land bank, the group will continue to be selective in its land replenishment strategy, mindful of the global economic uncertainty. It has always remained nimble and strategic in its implementation plans to unlock maximum value of its assets for shareholders, at the opportune time," CDL said in its result statement, which was signed off by managing director Kwek Leng Joo and director Kwek Leng Peck.

CDL executive chairman Kwek Leng Beng, known to be a workaholic, did not sign off the group's Q1 result statement yesterday as he is recovering from the flu, said a CDL spokesman when asked by BT.

For Q1 ended March 31, 2012, revenue rose 9.4 per cent year on year to $846.7 million, propelled by a 20.3 per cent rise in revenue for property development to $394.3 million. The improvement came largely from maiden contribution from The Glyndebourne condo project along Dunearn Road, 368 Thomson, Cube 8, Hundred Trees and Tree House residential projects coupled with higher contribution from Volari at Balmoral Road. This was partly offset by the absence of contributions from One Shenton, Cliveden at Grange, Shelford Suites and Livia (in Pasir Ris) which obtained Temporary Occupation Permit in 2011.

Despite the higher topline from property development, the segment's profit before income tax (including share of after-tax profit of associates and jointly controlled entities) fell 30.7 per cent year on year to $88.02 million in Q1 2012 as profit margins for projects launched recently are lower than projects launched in the past few years.

No profit was booked for H20 Residences, Buckley Classique, The Palette and Bartley Residences as well as two EC projects, Blossom Residences and The Rainforest, even though these projects are substantially sold as their construction is still in the early stages.

The group's other operating income slid 69.4 per cent or nearly $104 million to $45.8 million in Q1 2012 due largely to gains on the disposal of The Corporate Office and a strata unit in GB Building at Cecil Street in Q1 2011; there were no similar gains in Q1 2012. CDL said that excluding the gains from disposal of non-core commercial properties, its Q1 net profit would have increased 14.8 per cent year on year.

Earnings per share fell from 31.1 cents in Q1 2011 to 17.2 cents in Q1 2012. As at March 31, 2012, the group's net gearing ratio was 21 per cent, unchanged from three months earlier and down from 26 per cent a year earlier. Interest cover fell to 16.5 times at end-March 2012, from 21.8 times at end-Dec 2011 and 25.9 times at end-March 2011.

CDL announced the results after the stock-market close. The counter ended four cents higher at $10.22 yesterday...
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