First Sponsor sees 92.7% plunge in 4Q20 earnings of $6.9 mil on lower revenue, gross profit

For the FY2020, earnings fell 38.3% y-o-y to $103.2 million, bringing EPS for the full-year to 8.87 cents, from 17.12 cents a year ago.

Revenue for the 4QFY2020 fell 73.5% y-o-y to $39.7 million due to the lower revenue from the sale of properties, lower rental income from investment properties, hotel operations, and a decrease in revenue from property financing.

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Revenue from sale of properties dropped 91.4% y-o-y to $8.7 million during the quarter due to the absence of revenue recognition of residential and commercial units from the Millennium Waterfront project in the current period.

4QFY2020 revenue from hotel operations fell 49.7% y-o-y to $9.2 million mainly due to lower occupancies and average room rates by the European hotels.

Revenue from property financing during the quarter fell 28.1% y-o-y to $19.3 million due to the absence of net penalty interest income of $4.0 million recognised in 4QFY2019.

Cost of sales during the quarter decreased by 95.7% y-o-y to $3.2 million due the lower revenue from sale of properties.

Accordingly, gross profit for the 4QFY2020 dropped 50.8% y-o-y to $36.5 million due to lower gross profit from the sale of properties, rental income from investment properties, property financing and hotel operations.

Revenue for the FY2020 fell 36.1% y-o-y to $203.9 million due to lower revenue from sale of properties, hotel operations and rental income from investment properties.

FY2020 gross profit fell 9.1% y-o-y to $171.9 million due to the lower gross profit generated from sale of properties, rental income from investment properties and hotel operations.

However, the group achieved higher overall gross profit margin (GPM) for the FY2020 due mainly to the change in sales mix, particularly the bulk sale of car parks of Plots A, B, C and D of the Millennium Waterfront project, which were carried at no cost.

As at Dec 31, 2020, cash and cash equivalents stood at $476.3 million.

For the 4QFY2020, the board has proposed a second interim dividend of 2.0 cents per share payable on Feb 26.

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SEE: Low occupancy at European hotels could hit First Sponsor's revenue: Phillip Securities

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The group, on Feb 9, entered into a conditional sale and purchase agreement to acquire a company with a 100% stake in a property development project in Panyu, Guangzhou for a consideration of RMB1.56 billion ($323.3 million).

Upon the completion of the acquisition, it will own a 95% effective interest in the project.

The group says it continues to be optimistic about the Guangdong-Hong Kong-Macau Greater Bay Area (GBA) and will actively pursue further opportunities in the region.

“The outbreak of the Covid-19 pandemic has severely disrupted global economic activities. The group’s hospitality property holding business was hit hard due to the implementation of various measures including temporary lockdowns, entry restrictions and border closures, to stem the spread of the highly contagious virus. The lacklustre performance of the hospitality sector is expected to continue in the near future, which will have a negative impact on the group’s profitability,” says First Sponsor’s group CEO Neo Teck Pheng.

“On a more positive note, the sales of the group’s various Dongguan property development projects have to-date been very strong. As the rollout of the vaccinations to the worldwide population gathers momentum, business activities across all sectors are expected to pick up.”

“With a strong balance sheet, substantial unutilised committed credit facilities and potential equity infusion from the exercise of outstanding warrants, the group is well equipped to capitalize on any new business opportunities when they arise,” he adds.

As at 11.33am, shares in First Sponsor are trading flat at $1.35.