GuocoLand’s gains fall 43% on lower property sales
Cooling regional property markets have taken a hefty chunk out of GuocoLand’s bottom line.
The property developer’s full-year net profits plunged 43 per cent to $161.8 million on the back of a 4 per cent dip in revenue to $670.9 million.
Besides lower contribution from property sales, GuocoLand enjoyed significant one-off contributions for the 2007 financial year. These included a $19.3 million contribution from the sale of a long-term investment, $16.9 million from the sale of a hotel in Hanoi, and $10.3 million from an equity swap.
Its finance costs had also risen by 22 per cent to $39.4 million, due to higher interest rates and higher bank borrowings.
Earnings per share was 20.17 cents, down from 46.15 cents last year, while net asset value rose from $2.30 last June to $2.41 this year.
Despite the poorer showing in the 12 months ended June 30 this year, GuocoLand is paying out a dividend of eight cents per share, the same as last year.
It warned that this financial year is likely to be challenging due to slowing economic growth in Singapore and in the region.
This is already showing up in more ‘cautious sentiment in the property market…evidenced by a slowdown and delay in property launches and a lower take-up rate’ in Singapore, it said.
GuocoLand is hopeful that the upcoming integrated resorts will boost economic growth and, accordingly, its own fortunes. It added that the medium-term demand for residential property should remain stable.
Its other markets are also under pressure. China, despite higher growth compared with Singapore, is also facing a cooling property market due to ‘credit squeeze, slower sales and lower prices’. While it will continue to grow in the long term, medium-term demand will only be ’stable’ in the light of these problems.
And while Vietnam’s long-term prospects ‘remain bright’, it is currently beset by high inflation, which has prompted the government to tighten credit and reduce loans.
One bright spark is Malaysia. GuocoLand said government policies to make home ownership more attractive meant ‘property sentiment will remain positive in the medium term’.
Source : Straits Times - 23 Aug 2008
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