Published April 29, 2008

Allgreen Q1 profit plunges 65%

Company cites US sub-prime crisis as a factor, says property market was subdued


ALLGREEN Properties yesterday posted net earnings of $17.5 million for the first quarter ended March 31 - a 65 per cent slump from $49.6 million in the same period last year.

Earnings per share plunged 66 per cent to 1.10 cents, from 3.28 cents in Q1 2007. And in similar fashion, revenue sank 52 per cent to $87.9 million, mainly due to a drop in development income.

Citing the US sub-prime crisis as a factor, Allgreen said the property market was subdued, which led to lower number of transactions in the residential sector.

'In view of the slowdown, the group held back launching residential projects,' it said. But landed properties launched at Pavilion Park, Bukit Batok saw good take-up.

The saving grace for Q1 was investment property revenue, which improved from Q1 2007 due to higher rents from offices, serviced apartments and retail space. Revenue from Traders Hotel also rose as a result of higher room rates.

But costs and expenses were up sharply. Finance cost increased 51 per cent from a year earlier due to borrowings for investments in China and Vietnam and land purchases in Singapore.

Other operating expenses soared 79 per cent, mainly due to higher depreciation and an 'unrealised exchange loss arising from US-dollar transactions in respect of investment in Vietnam'.

Despite the lacklustre first quarter results, Allgreen said it expects to be profitable in 2008, as it forecast when it issued its 2007 results.

According to Allgreen yesterday: 'The property sector saw a decline in transactions in Q1 2008 and this is likely to extend into Q2. However, we expect a pick-up in activity in the second half of 2008.'

Allgreen's stock closed three cents higher at $1.33 yesterday, with with more than 2.2 million shares changing hands.

Analysts are divided on the company's prospects. In the past month, CIMB-GK has anticipated it will 'underperform', while DBS Vickers and UBS have called a 'buy' on the shares.