SINGAPORE (May 9): Property group Hiap Hoe has announced a loss of $1.3 million for 1Q18, reversing into the red from earnings of $7.1 million a year ago on higher expenses and foreign exchange losses.
This comes despite a near doubling of revenue to $49.2 million over the quarter compared to $25.3 million in 1Q17 on an increase in contributions across all segments, particularly development properties and hotel operations.
Development properties revenue grew 45.1% to $22.2 million due to the increased sale of units at Marina Tower, Melbourne.
Rental revenue grew 15.9% to $7.8 million due to rental revenue from Orchard Towers units acquired in Dec 2017 and higher occupancies for the group’s other properties.
Revenue from hotel operations grew by 35% to $17.3 million on maiden contributions from Four Points by Sheraton, Melbourne, which commenced operations on 28 March 2017 and the Holiday Inn Express Trafford City, Manchester, following completion of the acquisition of Trafford City Hotel Limited on 16 June 2017.
Leisure business revenue also booked 4% growth to $2 million after two bowling centres were added to the group’s business portfolio.
Other income however fell by 60.4% to $1 million from $2.5 million previously in the absence of a provision for tenancy and contract matters regarding Hiap Hoe’s disposal of its Australian properties.
Depreciation expense grew 28.8% to $6.7 million due to additional depreciation expense from the new hotels in the group as well as the newly acquired investment property at Orchard Towers.
Other expenses surged 58.4% to $12.5 million, mainly due to selling expenses for Marina Tower, Melbourne and operating costs for the group’s hotels.
Meanwhile, finance cost more than doubled to $2.8 million on higher borrowings of the group.
A foreign exchange loss of $4 million was also recorded compared to a $2.3 million forex gain in 1Q17, attributed to the weakening of Australian dollar. This was in addition to a fair value loss in financial instruments of $2.1 million as compared to a fair value gain of $3.4 million a year ago.
Hiap Hoe says it will continue to manage its recurring rental income by increasing both the yields and occupancy rates of the properties and will seize opportunities to expand our portfolio of properties locally and overseas.
It also expects the hotel sector to contribute positively to its revenue within the next 12 months in spite of a continued competitive environment both locally and overseas.
Shares in Hiap Hoe closed flat at 88 cents on Tuesday.
