Frasers Property's H1 profit increased 52.2% to S$197.2 million thanks to residential New Launch Condos contribution

HIGHER contributions from residential New Launch Condos boosted Frasers Property's first half earnings: TQ5 +1.14%, but the group will continue to take a conservative approach to system management its residential system.

On Thursday (May 11), Frasers Property posted a 52.2% increase in distributed profit to S$197.2 million for the first half of the year ended March 31, from 129.6 million Singapore dollars of the previous year.

Group revenue grew 15.6% to S$1.9 billion in the six-month period, from S$1.7 billion a year earlier. Earnings per share (EPS) was S$0.0502 for the first half of the year, up 51.7%. No interim dividend was announced, unchanged from the previous year.

Frasers Property notes that New Launch Singapore Condos residential development business has benefited from increased apartment sales and prices in a vibrant housing market.

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All New Launch Condos in the 455-unit Riviere luxury condominium were sold on April 30, 2023. Frasers has another project on the market – Sky Eden@Bedok. The project is being built on the Bedok Point site, which was acquired by Frasers Property from real estate investment fund Frasers Centrepoint Trust for S$108 million in 2020. So far, 128 units have been sold, equivalent to 81% of projects.

However, since the most recent launch of Frasers, the government has stepped up cooling measures to reduce demand and curb prices. When asked at the earnings press conference on May 11 about the company's stance on the market and whether Frasers would replenish its land bank, Frasers Property Singapore managing director Soon Su Lin said. “House remains an important asset class not only in Singapore but around the world. Global.

“In addition to our strengths in retail as well as mixed-use development, we will continue to evaluate the good locations available through Government Land Sale or inter-block opportunities, but We will of course remain cautious and disciplined in our approach.”

She said Frasers Property will continue to monitor its legacy properties and continue to optimize its current portfolio.

Soon said the long-term outlook for the residential sector remains positive. “Inventories of unsold apartments are still very low. There are more homebuyers on the market than investors, and the credit profile of the buyers remains strong.”

As of 31 March 2023, pre-sale revenue for the group's residential business amounted to S$2.9 billion.

DBS analyst Derek Tan notes that while the overall results are good, Frasers' housing business is only "a small part of the pie" and expects to see more active developers in the sector. land fund area.

Meanwhile, the easing of Covid-19 restrictions globally has contributed to improved results for the group's hospitality segment across various geographies, with pre-interest and tax profits for the group. this segment grew 128% to S$64 million.

However, the improved operating income was partially offset by a net fair value loss, compared with the net fair value increase recorded in the same period a year earlier.

Looking ahead, group chief executive Panote Sirivadhanabhakdi noted that macro developments, especially higher inflation, rising interest rates, volatile foreign currency volatility and the possibility of asset re-valuation, will continues to pose challenges for the real estate sector.

In response to a question about how Frasers Property has consistently traded below book value and whether it would consider a dual listing in Thailand, Panote said the group's portfolio includes assets global property but they are looking at all options to extend the value.

He added: “We have certainly received advice from our investors and shareholders on how we can create better liquidity and how to improve the valuation of our shares. . My view is that at our management level, we continue to drive profits and serve our shareholders.”

Net debt to equity was 72.7% for Frasers Property in the first half of the year but this is “within the comfort of the group” in terms of the group's real estate asset structure.

When asked about the debt reduction plan, Loo Group CFO Choo Leong said: “We are constantly looking for ways to reduce leverage, but we are putting it in context where we can grow the business.”

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