Selangor Properties 2Q earnings clipped on fair value loss, slips into the red in 1H

KUALA LUMPUR (June 26): Selangor Properties Bhd’s net profit for the second quarter ended April 30, 2018 (2QFY18) contracted by 22.9% to RM6.63 million from RM8.6 million in the same period a year ago, which was dragged by fair value loss of its investments overseas but the amount was mitigated by a narrower unrealised foreign exchange loss.

Quarterly revenue, however, grew 18.68% to RM38.72 million, from RM32.63 million, thanks to stronger operations in Australia amid a stronger ringgit, which had strengthened against the Australian dollar.

The property firm recorded a lower foreign exchange loss of RM1 million in 2QFY18 compared with RM12.5 million in 2QFY17.

Selangor Properties did not declare any dividend for the quarter under review.

For the cumulative six months ended April 30, 2018 (6MFY18), Selangor Properties dipped into the red with a net loss of RM34.31 million compared to net profit of RM52.65 million in the previous corresponding period, despite a 6.87% increase in revenue to RM67.41 million from RM63.08 million in 6MFY17.

On a segmental basis, Selangor Properties said revenue for its investment properties had marginally decreased as a result of lower car park collection.

“There was no major change in the occupancy rates and rental rates of the group's properties for the current quarter under review,” Selangor Properties said in a filing with Bursa Malaysia yesterday.

Currently, Selangor Properties owns the 25-storey Menara Milenium in Damansara Heights, which boasts 555,000 sq ft of net lettable area and houses some 4,000 office workers. It also owns Plaza Batai at Pusat Bandar Damansara.

As for its property development, Selangor Property said it has progressively booked revenue from the sales of units at Aira Residence in Bukit Damansara, but suffered segmental loss as a result of higher marketing, corporate and administrative costs.

The company is currently building 105 units of Aira Residences, an ultra-luxurious condominium on a three-acre parcel of land that is valued at a gross development value (GDV) of RM870 million. Besides Aira Residences, Selangor Properties is also building Permata Heights in Gombak, which has a GDV of RM700 million.

As for the investment holding division, Selangor Properties said foreign exchange loss expanded to RM53.8 million in 6MFY18 compared with a gain of RM27.3 million, as the ringgit strengthened against the US and Singapore dollars.

Over in Australia, Selangor Properties said the higher profit for 6MFY18 was in line with higher rental revenue and income distribution from land development projects, along with the lower operating expenses and finance costs.

Going forward, Selangor Properties said it does not see any major impact on its financial performance as the government zero-rated the goods and services tax, and will substitute it with the sales and services tax in September.

“Notwithstanding the foregoing, for the current financial year, the group’s investment properties in Malaysia and Australia are expected to maintain their present occupancy and rental rates,” the company said.

Until the government lifts the freeze on residential developments priced above RM1 million, Selangor Properties said it will re-assess the feasibility of developing a property project at the Wisma Damansara site.

In summary, Selangor Properties said it “expects its operations in all business segments to remain stable for the current financial year.”

Selangor Properties’ share price has been on a downward trend in the past six months. The counter has declined from RM5.36 in mid-December last year to RM4.14 yesterday — the lowest level since October 2015. It closed unchanged at RM4.14 today for a market capitalisation of RM1.42 billion. — theedgemarkets.com

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