Tropicana reports fourfold increase in 3Q earnings

KUALA LUMPUR (Nov 27): Property developer Tropicana Corp Bhd, which recorded a fourfold jump in third-quarter net profit, said it is on track to exceed the previous financial year’s total sales of RM1.5 billion in the current financial year ending Dec 31, 2015 (FY15).

“Despite a slower property market, Tropicana delivered commendable sales performance in the first nine months of the current financial year, chalking up new sales of RM1.26 billion with unbilled sales at a record of RM3.1 billion as at end-September 2015,” it said in a statement yesterday.

“The group’s integrated mix township development projects in the central region continue to draw healthy interest, especially for landed properties in Tropicana Aman, Shah Alam and Tropicana Heights, Kajang, where new launches year to date have attracted good take-up rates from buyers,” it added.

Tropicana’s net profit surged to RM151.78 million or 10.49 sen per share for the three months ended Sept 30, 2015 (3QFY15) from RM29.52 million or 2.12 sen per share a year ago, on gains from disposals of investment properties and a subsidiary.

This was despite revenue for 3QFY15 falling 18.7% to RM244.58 million in 3QFY15 from RM300.73 million in 3QFY14, due to lower work in progress in its property development segment in the quarter, as a number of the group’s projects were in the early stages of construction.

Tropicana also declared a first interim dividend of five sen per share for FY15, payable on Dec 23.

For the nine-month period (9MFY15), net profit rose 53.2% to RM194.23 million or 13.54 sen a share from RM126.8 million or 9.56 sen a share in 9MFY14.

Revenue for 9MFY15 jumped 10.9% to RM947.83 million from RM854.88 million in 9MFY14.

Net gearing improved considerably to 0.28 times shareholders’ funds as at end-September, against 0.68 times at end-December 2014.

Going forward, Tropicana believes there will still be demand for landed properties and integrated developments in good locations with great accessibility and attractive pricing.

“Tropicana’s strategy for 2016 will continue to be market-driven and adapt to market demand, while focusing on unlocking value of its land bank in the Klang Valley, as well as those in the northern region,” it said.

The group has a total land bank of more than 1,600 acres (647.5ha) in Malaysia, with a future gross development value of over RM50 billion.

“Together with high unbilled sales and a strengthened balance sheet, the group is positioned to deliver sustained performance in the near future,” said Tropicana.

The stock closed one sen or 1.06% higher at 95.5 sen yesterday, with a market capitalisation of RM1.38 billion.

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This article first appeared in The Edge Financial Daily, on Nov 27, 2015. Subscribe to The Edge Financial Daily here.