Tropicana 4Q net profit falls 22.5%

KUALA LUMPUR (Feb 11): Property developer Tropicana Corp Bhd's net profit fell 22.5% to RM198.66 million for the fourth quarter ended Dec 31, 2014 (4QFY14), from RM256.45 million a year ago, on lower contribution from its property investment and resort operations segment.

This was despite revenue for 4QFY14 more than doubling to RM964.29 million from RM444.68 million a year ago, due to higher revenue recognitions across key projects within Greater Kuala Lumpur and Iskandar Malaysia in Johor, and gain on land sales of RM167.9 million in Tropicana Aman.

Earnings per share (EPS) for 4QFY14 was lower at 14.24 sen, from 23.18 sen in 4QFY13.

For the 12 months period (FY14), Tropicana's (fundamental: 1.3; valuation: 3) net profit dropped 7.8% to RM333.94 million, from RM362.31 million in FY13.
 
Revenue for FY14 rose 33.7% to RM1.97 billion, from RM1.48 billion in FY13; while EPS was 24.85 sen, compared with 34.31 sen.

Tropicana attributed the improved revenue for FY14 to higher revenue recognitions across key projects within Greater Kuala Lumpur, and a RM470.7 million revenue gain from land sales.

In a statement today, Tropicana said it chalked up new sales of RM1.5 billion as of Dec 31, 2014.

"We have secured unbilled sales of RM2.7 billion, which places us in a very good position to deliver sustainable performance in 2015," it added.

Tropicana said although the property market is expected to remain challenging in 2015, it believes it has the right products mix, such as landed properties and integrated developments in good locations with great accessibility and attractive pricing, that would continue to appeal to buyers.

The group intends to focus more on development activities within the Klang Valley this year, where Tropicana has more than 1,000 acres of development land, with potential gross development value (GDV) of RM24.5 billion.

This includes the 863-acre Tropicana Aman in Canal City, earmarked for an integrated township with potential GDV of RM13.0 billion, for which the maiden launch is expected this year.

"The group is also preparing to launch new phases of terrace homes in Tropicana Heights, Kajang, and the third serviced apartment block in Tropicana Gardens — an integrated mixed development located in Kota Damansara, with direct link to the Surian MRT station," said Tropicana.

It added upon completion of its sale of Tropicana City Mall and Tropicana City Office Tower in Petaling Jaya to Capitamalls Malaysia Trust for RM540 million cash, the group’s net gearing level is expected to improve from 0.68 times to 0.5 times.

Tropicana shares closed unchanged at RM1.04 today, giving it a market capitalisation of RM1.43 billion.
 
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)