SINGAPORE (April 27): First Sponsor Group has declared $14.2 million in earnings for the first quarter ended March 31, which is 16.4% higher compared to $12.2 million in 1Q16 on higher revenue and marks the 10th consecutive q-o-q profit growth since its IPO in July 2014.
In a Thursday filing to the SGX, the mixed property developer and owner of commercial properties in China says it achieved its best quarterly residential sales for the Millennium Waterfront project yet with over a thousand residential units sold in the quarter alone, which accounts for over 70% of that achieved in the entire year of 2016.
As a result, revenue for the quarter nearly doubled to $81.3 million from $45.6 million in the previous year, due mainly to an increase in revenue from sale of properties and hotel operations by $35.9 million and $2.3 million respectively.
The significant increase in revenue from sale of properties in 1Q17 mainly resulted from the higher number of residential in the Millennium Waterfront project being handed over in the current quarter, which was 600 residential units as compared to 324 residential units in the same quarter a year ago.
However, the higher revenue was offset in part by a decline in rental income from investment properties as well as revenue from property financing of $0.7 million and $1.7 million respectively.
The fall in rental income was mainly to lower rental revenue from the Zuiderhof I property as a result of lease incentives granted for a lease extension of another 7 years.
On the other hand, lower property financial was registered due to an average interest servicing entrusted loan balance during 1Q17, which arose from the various loan defaults in January 2016.
Cost of sales grew 85.7% to $57.9 million from $31.2 million a year ago, which is in line with the increase in revenue from sale of properties in 1Q17 as well as a full quarter’s hotel-related depreciation charge of $1 million, which has been included since the Wenjiang hotels commenced operations in late December 2016.
Administrative expenses remained constant at $7.2 million.
The group’s gross profit margin decreased 28.8% in 1Q17 from 31.5% in 1Q16, reflecting a change in profit composition as 3.9% of the group’s gross profit for the current quarter was from a higher yielding property financing segment which has a 100% gross profit margin, whereas 18.1% of the total gross profit in 1Q 2016 was generated by the property financing segment.
“Despite the volatile global market conditions carrying into 2017, the Group has kicked off to a good start with the property development segment booking robust sales at the Millennium Waterfront project,” says Neo Teck Pheng, group CEO of First Sponsor.
“The performance of the Crowne Plaza Chengdu Wenjiang and Holiday Inn Express Chengdu Wenjiang Hotspring hotels has been encouraging with a steady growth in patrons especially for the conference and banqueting facilities,” he adds.
“On the property financing front, the group has recovered RMB89.5 million cash proceeds representing full collection of a RMB70 million loan principal and associated penalty interest in March 2017. The positive enforcement result of the aforementioned defaulted loan is encouraging. The group remains optimistic of the recoverability of the other property financing loans in default.”
Shares of First Sponsor closed 0.4% lower at $1.32 on Wednesday.
