Published November 08, 2012

Ho Bee posts $31.5m Q3 profit

3.5% dip largely due to absence of sale of investment property

By kalpana rashiwalla

PROPERTY group Ho Bee has posted group net profit of $31.5 million for the third quarter of this year, down $1.1 million or 3.5 per cent from the same period last year.

The drop was due chiefly to the absence in the latest period of a $13.1 million gain Ho Bee booked in the year-ago period from the sale of investment property. However, this was partly offset by a 165.4 per cent or $12.6 million increase in share of profit from jointly controlled entities, thanks to the fully sold 248-unit Parvis condo in Holland Hill obtaining temporary occupation permit (TOP) in September. Under accounting rules, developers typically book 25 per cent of profit on units sold in a Singapore residential project at the point when it receives TOP. Ho Bee developed Parvis jointly with MCL Land.

Group turnover rose 5.6 per cent year-on-year to $59.1 million for the third quarter ended Sept 30 due to higher revenue recognition from development properties, chiefly the Trilight condo.

Underpinning Ho Bee's earnings for the fourth quarter will be income recognition from Trilight in Newton Road, which obtained TOP last month, along with completion of sale of the remaining units of The Orange Grove. Earlier this quarter, Ho Bee sold the last 11 units in the 72-unit completed project.

The 205-unit Trilight is now 99 per cent sold. The remaining unit is a penthouse, which is priced at over $8 million.

In Sentosa Cove, Ho Bee and its partner IOI Properties expect to receive TOP for their 302-unit Cape Royale condo (on the Pinnacle Collection site) in mid-2013. The duo may consider leasing out the units in the 20-storey project, depending on market conditions at the time. Another Ho Bee-IOI project on Sentosa Cove - the 151-unit completed Seascape condo - is now 31 per cent sold.

By Q3 next year, Ho Bee is expected to complete The Metropolis office development in Buona Vista. Leasing negotiations are underway with several parties, including the Singapore Exchange (for its back office), Shell, and Procter & Gamble, according to an earlier BT report.

Big tenants can expect to pay above $5.50 per square foot a month, BT understands. The Metropolis will have slightly more than one million square feet of net lettable area - office space of Grade A specifications - in two towers in addition to 22,000 sq ft of retail space, directly linked to Buona Vista MRT Station on the Circle Line.

Last month, Ho Bee announced the sale of Hotel Windsor in MacPherson Road for $163 million. The transaction will result in a gain of about $121 million based on Ho Bee's original purchase price of about $42 million. Of this $121 million gain, $94.7 million has been accounted for as revaluation reserve as at end-Sept 2012. A balance of $25.9 million will be recognised as profit upon completion of the sale in May next year, Ho Bee said.

The group's net asset value per share stood at $2.48 as at end-September, up from $2.34 at end-December 2011. Earnings per share came to 4.5 cents for Q3, unchanged from a year ago. In the stock market yesterday, the counter ended two cents higher at $1.49.

For the first nine months of 2012, Ho Bee's net profit slipped 12.6 per cent to $120.2 million. Turnover declined 10.1 per cent to $244.9 million.