Guocoland's 2Q profit lower on absence of land sale proceeds

KUALA LUMPUR (Jan 26): Guocoland (M) Bhd, the property arm of Hong Leong Group, saw its net profit for the second quarter ended Dec 31, 2017 (2QFY18) contract to RM965,000 from RM110.81 million a year ago — despite a tripling in revenue — as the previous year had recorded a higher share of profits from an associate following a land sale.

Its associate Vintage Heights Sdn Bhd completed the sale of a piece of land in Sepang, Selangor, in 2QFY17, for RM474.99 million, with reportedly RM116 million attributable to Guocoland.

Guocoland's revenue for the quarter under review, meanwhile, grew 253% year-on-year to RM108.61 million from RM30.73 million, thanks to higher topline contribution from residential projects in Damansara City and Oval, its Bursa Malaysia filing yesterday showed.

As for the cumulative six months of FY18 (1HFY18), Guocoland posted a net profit of RM2.03 million against the RM111.08 million it recorded a year earlier, though revenue surged 256% to RM253.17 million from RM71.14 million.

Looking ahead, Guocoland said although the overall short-term prospects of the property industry are expected to remain challenging, it believes there will still be demand for properties in prime locations with good accessibility to amenities and attractive pricing.

With that, the group said it will continue to focus on monetising its inventories, leasing out vacant spaces and completing its developments in a timely manner. New product launches, meanwhile, will be phased according to prevailing market sentiments.

"The property market is showing signs of recovery. The increase in activities is attributed to the demand for affordable range of properties priced at RM500,000 and below," it said.

However, despite higher gross domestic product in 2017, coupled with the recovery of crude oil prices, key issues like the rise in unsold high-end residential properties, oversupply of offices and tight financing, will continue to dampen the industry, it added.

Guocoland shares traded unchanged to close at RM1.12 yesterday, valuing the group at RM777.51 million. —

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