Despite strong revenue growth, City Developments (CDL) has booked a sharp 40.6 per cent drop in fourth-quarter net profit, owing largely to the absence of one-time gains recognised a year earlier.
But investors were impressed with the developer’s overall showing. CDL shares jumped 4.5 per cent, or 42 cents, to close at $9.66 after the results were announced.
Earnings for the three months ended Dec 31 slumped to $243.8 million from $410.5 million in the fourth quarter of 2015, CDL reported yesterday.
It said the absence of substantial profits recognised from the group’s second profit participation securities (PPS) platform last year, where three office assets were monetised, had dragged net profit lower.
The decline, however, was offset by stronger residential sales in Singapore and China, as well as divestments including the sale and recapitalisation of Summervale Properties, which led to the set-up of the group’s third PPS platform.
“Despite the challenging macro environment, the group delivered a credible set of financials,” CDL chief executive Grant Kelley said at a briefing yesterday.
Fourth-quarter revenue rose 36.5 per cent year on year to $1.17 billion, thanks to its property development business which booked fresh contributions from Hong Leong City Centre in Suzhou and steady sales of Singapore projects.
CDL and its joint venture partners sold more homes last year – 1,017 units (including executive condos) valued at about $1.25 billion – up from 674 units sold for $691.5 million in 2015.
Although the property cooling measures remained intact here, CDL executive chairman Kwek Leng Beng said he remains hopeful that the Government, having a “bigger picture” of the market, would adjust them when necessary.
“It doesn’t mean that they won’t do so this year or next year or the year after… I believe our Government, being so dynamic, they will not allow things to go beyond repair,” Mr Kwek said.
Price declines have become the norm since the third quarter of 2013, with values of private homes down by about 11 per cent at the end of last year. That said, more buyers have returned to the market last year, with new home sales inching up to 7,972 units, from 7,440 in 2015.
CDL said it intends to launch the second phase of its freehold Gramercy Park condo project in Grange Road, comprising 87 units in the South Tower, in this half of the year.
This follows “good take-up” for phase one, which saw 64 per cent of the 87 units in the North Tower sold, CDL noted. Average price achieved was over $2,600 per sq ft.
It may also launch the 124-unit New Futura project in Leonie Hill Road in the second half, depending on market conditions. The freehold project, near Orchard Road, will comprise two 36-storey blocks with six sky terraces.
In the office property segment, CDL said occupancy remained healthy at 95.9 per cent as at Dec 31 – above the national average of 88.9 per cent.
It intends to start refurbishment works at Republic Plaza in Raffles Place in the fourth quarter, beginning with lift upgrading.
Quarterly earnings per share was 26.1 cents, lower than the 44.4 cents a year before. Net asset value per share came in at $10.22 as at Dec 31, up from $9.89 at the end of 2015.
CDL garnered record full-year revenue of $3.91 billion, up by 18.2 per cent from fiscal year 2015. Full-year net profit slid 15.5 per cent year on year to $653.2 million.
The board has recommended a final dividend of eight cents per share, as well as a special final dividend of four cents per share.
Credit: Straits Times